Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — TRADE AND INDUSTRY

Electricity Generation

Mr. Cummings: To ask the President of the Board of Trade when he last met the Director General of Electricity Supply to discuss the regulation of electricity generation.

The Minister for Energy (Mr. Tim Eggar): My right hon. Friend the President of the Board of Trade and I meet the Director General of Electricity Supply from time to time and discuss a wide range of electricity issues.

Mr. Cummings: As electricity prices have risen by 9 per cent. in the past month, while British Coal prices have fallen by 19 per cent., does the Minister agree that the generators are failing abysmally to pass those benefits on to the consumer? Does he also agree that the cost of coal-fired electricity is considerably lower than gas-fired generation? If he does agree, why does he continue to shut pits, while promoting the building of new gas power stations?

Mr. Eggar: I refer the hon. Gentleman to the coal review White Paper, which I am sure he has read, which examines all those arguments in detail, as they were examined by the Select Committee on Trade and Industry. The hon. Gentleman should have set the record straight and pointed out that electricity prices to the domestic consumer have fallen in nominal terms and have certainly fallen in real terms in almost every area.

Mr. Simon Hughes: Given that the forecast of the National Grid is that there will be 57 per cent. over-capacity by 1997–98, do the Government make it clear to the electricity supply industry that its priority should be conservation rather than production, and if not, why not?

Mr. Eggar: The hon. Gentleman should study the National Grid statement in rather more detail. It sets out a number of scenarios making different assumptions on a seven-year horizon. The Government are, of course, concerned to promote energy conservation. That is why the budget of my right hon. and learned Friend the Secretary of State for the Environment in this area has almost doubled.

Mr. Robin Cook: Does the Minister recall that, in March, the House was told that the Government had saved 12 pits by coming up with a subsidy to enable the generators to burn more coal? Is he aware that, in the two

months since then, far from burning more coal. the generators have been burning even less than they had planned? Will he meet the generators and ask them when they intend to place a contract for a single extra bag of coal? If he does not get that contract, does he appreciate that those 12 pits will go the way of the rest? If that happens, his subsidy will look like a sham which solved a political crisis for the Conservative party but has not solved the jobs crisis in the coal industry.

Mr. Eggar: That is absolutely typical of the hon. Gentleman: when he identifies a problem, he wants the Government to get in and sort it out. He believes in state direction. He has no belief whatever in the private sector and wants to spend taxpayers' money regardless of the value to the economy as a whole. The Government have made it absolutely clear that we will make a subsidy available, but that it is a matter for negotiation between British Coal and the private sector generators to see whether additional coal sales can be identified.

Exporters

Mr. Clifton-Brown: To ask the President of the Board of Trade what steps his Department has taken to increase the competitiveness of British exporters.

The Minister for Trade (Mr. Richard Needham): The Government give a high priority to helping British exporters. United Kingdom companies are now in a better position than ever to win business overseas.

Mr. Clifton-Brown: Does my hon. Friend agree that the competitiveness of our exchange rate has helped to constrain inflation and that we need to keep bearing down on domestic costs to keep inflation under control? Those economic measures introduced by our Government are more effective than the, gloom and carping by the Opposition about the performance of our manufacturing industry and exports.

Hon. Members: Rubbish.

Mr. Needham: Despite Opposition Members' cries of "Rubbish" from a sedentary position, since 1981 the volume of British manufactured exports has grown faster than that of France, Germany, Italy, the United States or Japan. During the past three years, manufactured exports have risen by four times as much as imports, and since 1989 our exports of manufactures are up 16 per cent. Instead of doom, doom, gloom and gloom, which is all that we get from Opposition Members, that is the real history behind British manufacturing exports.

Mrs. Helen Jackson: In view of the enormous role that the steel industry plays in United Kingdom exports, is the Secretary of State aware of the serious potential threat posed to the British steel industry by the closure of Ucar Carbon, the only plant in Britain that manufactures graphite electrodes, which are part of the electric arc smelting process in special steel manufacture? It is the only United Kingdom plant, and it is scheduled for closure. What can the Secretary of State and his Ministers do, along with Opposition Members, to prevent that closure?

Mr. Needham: As the hon. Lady knows, that is a matter for my right hon. Friend. I believe that she is in discussion with him on that issue, and I am sure that he will work as hard as he can with her to ensure that whatever action


might be taken will be taken. However, with regard to trade generally, as the hon. Lady says, British Steel's performance is unrivalled, and it is unrivalled and competing in markets all over the world because it has been privatised.

Mr. Butcher: Does my hon. Friend agree that, when it comes to manufactured exports, what distinguishes manufacturers from the service sector is that manufacturing is more capital intensive? Does he further agree that there may be a danger that our progress in recovering from recession may be affected by a shortfall of capital in the small firms manufacturing sector? Will he, therefore, as the champion on this cause with the Treasury, urge the Chancellor of the Exchequer to consider, within the lifetime of this Parliament, the abolition of capital taxation, which will work wonders for inward investment and give us a clear competive edge within Europe and in the broader world market?

Mr. Needham: I shall pass on my hon. Friend's views to my right hon. Friend the Chancellor. As he knows, the Budget contained major measures, such as the loan guarantee scheme, for assisting small companies, and the Government are determined to do all they can to help small companies, not least in exports.

Mr. Robin Cook: As the Minister has been so free in lecturing the Opposition for talking doom and gloom, will he take the opportunity to rebuke the Chancellor of the Exchequer, who, in his Budget statement, forecast that the manufacturing deficit will double this year? Did he get it wrong, or is he also peddling doom and gloom? Will the Minister confirm that, in every year until 1982, we had a surplus in manufactured trade, and that in every year since 1982, we have had a deficit in manufactured trade? If, after 14 years, the hon. Gentleman really believes that the Government now have the right policies for industry, can he say in which year we shall return to the manufactured trade surplus that we used to have in every year until the Conservative party was elected?

Mr. Needham: The hon. Gentleman knows perfectly well that such forecasts from anybody are totally meaningless, and he would never make such a forecast himself. The figures I gave for manufacturing exports are true. They are not figures that he has ever used and he would never use them because, as far as he is concerned, they do not paint the true picture of British manufacturing —which is one of tremendous success. The Government do hare a policy on exports and manufacturing exports. We have a policy to do everything that we can, with manufacturers and business, to promote our exports. That is very different from the hon. Gentleman's policy, which is to join the social chapter and to push up costs and push up the incentives for people to leave this country.

Mobile Phones

Mr. Ian Bruce: To ask the President of the Board of Trade what proposals his Department has to change the law to prevent the fraudulent re-chipping of mobile phones.

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh): I am not persuaded that a change in the law is necessary.

Mr. Ian Bruce: I declare an interest as an adviser to the Telecommunication Manufacturers Association and as an owner of one of those terrible machines that are likely to be stolen. I am sure that my hon. Friend knows of the growing prevalence of telephones being stolen and adapted for fraudulent use, which has come to the attention of not only the industry and users but even the House authorities, because a large number of telephones have been stolen from this place. Will my hon. Friend meet a delegation from the industry and of others concerned, and think again about improving the law to stop the fraudulent changing of mobile phones?

Mr. Leigh: My hon. Friend speaks with great knowledge of that subject, and I should be happy to meet a delegation led by him. Our legal advice is that there are adequate powers available under the Theft Act 1978 to prosecute, and further powers available under section 42 of the Telecommunications Act 1987. We are not convinced that further legislation is necessary in this instance.

Travel Operators (Funds)

Dr. Godman: To ask the President of the Board of Trade what further steps he is taking to ensure that travel agents and tour operators have sufficient funds to protect holidaymakers in the event of financial collapse; and if he will make a statement.

Mr. Leigh: Tour operators and travel agents who sell packages are required under the Package Travel Regulations 1992 to have security for the refund of customers' prepayments and for repatriation in the event of insolvency. It is their responsibility to ensure that they have sufficient funds to provide that security.

Dr. Godman: Is it not the case, if we can hear the truth, that the Minister has implemented an Arthur Daley-type charter for unscrupulous tour operators? What will he do this summer, when the first unbonded tour operator collapses, to repatriate stranded holidaymakers abroad who have no financial protection? Should we not all be urging our constituents to stick to dealing with firms in membership of the Association of British Travel Agents?

Mr. Leigh: For the first time under the directive, holidaymakers who deal with a package tour operator will have the reassurance that their deposit will be protected under an insurance, bonding or trust scheme. The Opposition proposed that we should institute an immensely bureaucratic licensing system, which would add enormously to consumer costs and to business regulation. That is why we rejected that licensing system, and we consider that our proposal gives sufficient consumer protection.

Mr. Page: I support my hon. Friend's remark that bonding and insurance will give greater protection to holidaymakers than ever before, reinforced by criminal sanctions if bonding and insurance do not take place. Does my hon. Friend accept that efforts by the five trade bodies to form an umbrella organisation, the Travel Protection Association, will give even more protection to holidaymakers wishing to travel under the auspices of those five organisations?

Mr. Leigh: I have heard of that scheme, which is much in the spirit of the directive. It is based on a flexible approach, the industry regulating itself, and ensuring customer protection without enormous costs and bureaucratic burdens being placed on the industry. That is precisely the approach that the Department favours.

Mr. Nigel Griffiths: The Minister says that a licensing scheme would be excessively burdensome and bureaucratic. Why is it that, before the last election, he issued a press statement saying that he would introduce licensing? Does the Minister realise that his regulations fail to implement fully article 7 of the package travel directive? What will he do to ensure that holidaymakers stranded abroad by travel companies that collapse are brought home at no extra cost?

Mr. Leigh: When we launched a consultation exercise, we found that if we were to introduce a licensing system, literally tens of thousands of operators would be covered by it. We would be tying them up in a tangle of red tape. One cannot legislate against fraud. We would only have ensured that business would be over-regulated and that the consumer would have to pay a lot more for his holiday. We have ensured that, when a deposit is paid to a travel package company, that deposit is protected by bonding, insurance or a trust scheme. That is a flexible approach, behind which the whole House can unite.

Teesside Industry

Mr. Bates: To ask the President of the Board of Trade what discussions he held on his last visit to Teesside in relation to measures to be taken to encourage manufacturing industry and exports.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): I last went to Teesside on 29 April. I visited the Greentyre company, held discussions with local business men and gave the toast to commerce and industry at the Teesside chamber's annual dinner.

Mr. Bates: I am grateful to my right hon. Friend for his answer. If he has had an opportunity to read the latest "Business Survey North", which is a survey of 1,000 businesses carried out by the Northern Development Company and the chambers of commerce, he will have noted that it clearly points out that 61 per cent. of manufacturing firms on Teesside have experienced an increase in export orders in the past three months and that it goes on to conclude that export orders on Teesside in manufacturing industry are now at a record level. Does my right hon. Friend agree that these facts are a clear vindication of this Government's economic and industrial policies and an equally clear demonstration of the dynamism of manufacturing industry on Teesside'

Mr. Heseltine: By one of those curious coincidences, I have seen the figures to which my hon. Friend draws my attention. They give grounds for precisely the optimism to which he refers. In the fourth quarter of 1992, manufactured exports, excluding erratics, were at a record level. Output in the three months to March was 2 per cent. higher than it was a year ago, and a quarter higher than in 1981.

Mr. Mandelson: At the same time as the right hon. Gentleman was holding his welcome discussions on Teesside, was he aware that his Department was preparing to desert the interests of a key manufacturing company, Steetley Magnesia Products Ltd. of Hartlepool? Is the right hon. Gentleman aware that, at a meeting today in Brussels, his Department is, I am told, withholding its support from vital anti-dumping measures that are needed to cope with unfair competition from China? Will he undertake today to reconsider the Government's position on this issue before Steetley Magnesia Products Ltd. and the future of this vital industry are placed in serious jeopardy?

Mr. Heseltine: The hon. Gentleman raises an important question. I can assure him that we are looking at this case, as we look at all allegations of dumping, extremely clearly and carefully, but the House must realise that there are just too many examples of companies that lose orders and immediately suggest that they did so for unfair reasons. Our overall national interest is to preserve openness of trade and not to become involved in recriminations. However, I shall certainly look at the hon. Gentleman's case.

Mr. Batiste: The Government have said repeatedly that they are seeking to help British industry by negotiating with our European partners to bring to an end the Arab boycott. Will my right hon. Friend confirm that that remains the Government's intention, and can he say whether—

Madam Speaker: Order. The question refers to Teesside. I hope that the hon. Gentleman will relate his question to Teesside.

Mr. Batiste: My right hon. Friend will be aware that industry in Teesside is seriously affected by the impact of the Arab boycott on Israel. Can he say whether any progress was made over raising that boycott in the recent negotiations between European Community Ministers and the Gulf Co-operation Council?

Mr. Heseltine: To the best of my knowledge, this matter was not raised at the recent meeting, but my hon. Friend has our sympathy. He will be aware, though, that there is not a mind to introduce legislation to deal with these matters. I think that that has the overwhelming support of the people who have an interest in those matters.

Textile Regions

Mr. Gordon Prentice: To ask the President of the Board of Trade how many applications have been received by his Department for use of the European Community Retex funds for development of textile regions; and when the result of these applications will be announced.

The Minister for Industry (Mr. Tim Sainsbury): Sixty-seven applications have been received. The projects will be selected by the Retex programme monitoring committee after the programme has finally been approved by the Commission. The results will be announced shortly thereafter.

Mr. Prentice: I thank the Minister for his reply, but can he tell the House why the British Government insist on the submission of 12-month schemes, whereas elsewhere in Europe five-year rolling schemes are the order of the day?


Can he assure the House that there will be no foot-dragging by the Department of Trade and Industry, which would imperil the bids from my own area, submitted by Lancashire Enterprises on behalf of the six north-east Lancashire district councils, which come to £750,000 and which would help 200 struggling firms in this area?

Mr. Sainsbury: The hon. Gentleman will be aware that, at the Edinburgh Council, the United Kingdom was not alone in expressing serious reservations about the benefits of these Commission schemes, which merely draw funds away from the general structural programmes. We do not know at this stage whether there will be another Retex scheme. The Edinburgh Council suggested that these schemes should concentrate on cross-border activities, but I do not think that Retex would naturally feature as such an activity. There is no foot-dragging by my Department. If there is a delay, it is because of the great length of time taken by the Commission—it took more than four months to respond to our proposals.

Mr. Dickens: Has my right hon. Friend stressed to the Commission the importance of Retex money for the regeneration of textile areas and the importance of an early decision? When does he expect the decision? Let us have no beating about the bush—are we talking about July, August or September? People need to know because it is a matter of job creation.

Mr. Sainsbury: I am happy to say that, if anyone is beating about the bush, it is up to us to try to get answers from the Commission. So far, the Commission has not approved proposals from any Community country. It took four months to respond to our proposals, and we are still negotiating a final agreement. As soon as we have that agreement, a programme committee can be constituted. There will be no delay from my Department.

Mr. Purchase: It is no use the Minister claiming that he is not dragging his feet. Is he aware that 1,000 redundancies were declared every month in the textile industry last year? That is a tragedy for British industry. The Minister seems to be bobbing when he should be getting weaving.

Mr. Sainsbury: I note the web and the weft of the hon. Gentleman's question. I draw his attention to one of the serious drawbacks of the Retex scheme, which is one of the reasons why the United Kingdom, in common with a majority of European Community states, voted against it. Only European Commission areas in objective 2 and 5b are eligible for help under the Retex scheme. Many of the parts of Britain that have the largest concentration of textile employees are outside those areas. The scheme is meant to help textiles, but can do so only in certain areas, and perhaps not the most important.

Mr. Tredinnick: Now that so many companies in Hinckley in my constituency have taken steps to improve their competitiveness, has my right hon. Friend any initiatives, that in addition to the Retex scheme, could further assist the reconstruction of the industry? Can he say anything about the potential for the hosiery and knitwear industry of a successful GATT round?

Mr. Sainsbury: My hon. Friend is right to draw the House's attention to the great strides that the textile industry has made in improving its productivity, which is

vital if it is to retain its competitiveness in a very competitive market and if it is to build on its achievements in exporting about £5 billion-worth of textiles last year.
The textile industry, like all other industries, is, of course, eligible for help under the whole range of my Department's schemes. Many of them are especially structured to help smaller businesses of which there are many in the textile industry. I entirely agree that a satisfactory outcome to the Uruguay round of GATT, which would lower tariff peaks, especially in one or two of our most important export markets, would be very helpful to the industry.

Mr. Fatchett: Does not the Minister understand the importance and relevance of the Retex scheme to an industry that has lost 400,000 jobs in the past 10 years? Has he not let the cat out of the bag by making it abundantly clear in previous answers that the Government are opposed to the Retex scheme and to helping those in the textile industry who have lost their jobs? Is he not asking the House to believe in a myth when he says that he as Minister will go to Brussels to rattle the cage of the European Commission? Are not we in fact dealing with an insensitive, indifferent and inefficient Minister, who will not be able to apply pressure in Brussels?

Mr. Sainsbury: I do not know how the hon. Gentleman thinks that he is furthering the cause of the textile industry by what he says, but perhaps he should be reminded of what I just said to the hon. Member for Wolverhampton, North-East (Mr. Purchase). The Retex scheme can help the textile industry only in areas that fall within the objective 2 and 5b map, which excludes many areas in Britain with a high concentration of textile employees. The funds for the Retex scheme are drawn from the general structural funds of the Community; they are not under the control of the Council of Ministers. It is a bureaucratic scheme, under the control of the Commission, it is costly and I do not think that it is very effective. That is the view of most EC countries.

EC Insurance Accounts Directive

Mr. French: To ask the President of the Board of Trade what representations he has received about the implementation of the EC insurance accounts directive; and if he will make a statement.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I have received a number of comments from a range of interested parties in response to a consultative document that I issued in June 1992. My officials have been in informal contact with a number of such parties. I expect to publish draft regulations for comment next month.

Mr. French: Does my hon. Friend agree that although the directive is, broadly, a step in the right direction in terms of establishing proper comparability between insurance company accounts in this country and those in other European countries, it will work only if carried out on a consistent basis? Will he, therefore, explain why the Government seem inclined to go beyond the directive on the disclosure of distributable profits, when the only certain consequence of that would be that British insurance companies could be put at a disadvantage in takeovers?

Mr. Hamilton: It is not our intention to go further than European directives require of us unless we can justify such extensions. The consultation has hardly started yet, so my hon. Friend is a little premature in assuming that we have come to any final conclusions. I shall certainly bear what he says strongly in mind.

Mr. Malcolm Bruce: Does the Minister accept that for British insurers to reap the full benefits of the single market which flow from the proposals that he has put forward for consultation, we need to resolve the problem of the long shadow of Maxwell, which affects the credibility of British insurers in the European single market? What steps will he take to ensure that that matter is finally resolved before his regulations are in place?

Mr. Hamilton: As the hon. Gentleman knows, that has little relevance to the question asked by my hon. Friend the Member for Gloucester (Mr. French). Of course, we do not countenance fraud in any way, but we have to be realistic. As my hon. Friend the Parliamentary Under-Secretary of State for Technology said in answer to the question about travel companies, we cannot pass laws that will make fraud impossible; we can only make fraud more difficult. As the hon. Gentleman knows, that is a policy of the highest importance, to which the Government are firmly committed.

Car Exports

Mr. David Evans: To ask the President of the Board of Trade how many cars are currently being exported each month from the United Kingdom; and what is the total value of the automotive industry to the United Kingdom economy.

Mr. Sainsbury: The automotive industry is an important part of the United Kingdom's manufacturing industry. So far this year, production for export is up by 7.31 per cent. on the same period last year.

Mr. Evans: Does my right hon. Friend agree that that success has been brought about by record inward investment, encouraged by low taxation, low interest rates and low inflation? Is he aware that because of unprecedented economic success under successive Governments, it is now impossible to park one's car in the House of Commons car park, as the lot opposite, w ho used to come here on bikes, now come here in cars?

Mr. Sainsbury: How welcome it is to hear praise for the achievements of any part of British industry and what a contrast it is with what we hear from the moaning minnies in the Opposition. How graphically my hon. Friend illustrated the success of the Government's economic policies; I congratulate him on that.

Mr. Eastham: Would not it be timely if the Minister were to congratulate some of the engineers who made those successful export figures possible? Is not it worth reminding him that Japanese investment in Britain has shown that Japanese management can manage the automobile industry far better than traditional British management and that the Japanese have invested in the industry, which traditional British management never did?

Mr. Sainsbury: I hope that, these days, when anyone on either side of the House congratulates British industry on an achievement—the automotive industry certainly

deserves congratulation on the transformation that it has achieved—we are congratulating not the work force or the management as separate entities, but the whole of British industry working together, as the hon. Gentleman would know if he visited the car factories of today.

Mr. Streeter: Will my right hon. Friend join me in congratulating the Ford Motor Company on its outstanding success in recently being awarded the Queen's award for export?

Mr. Sainsbury: I am happy to join my hon. Friend in congratulating the Ford Motor Company. I would only add my congratulations to all sections of the automotive industry, including—let us not forget—the many component companies which are steadily increasing their exports to Europe.

Mr. Cousins: The whole House will want to congratulate the teams of car manufacturers and car manufacturing work forces, including that coming on stream in the great county of Derbyshire, which we still have with us. Does the Minister recognise that our car exporters have now fought their way back to their position of two years ago? Our balance of payment deficit on cars was more than £2 billion last year. Does the Minister expect the balance of payments deficit to be £2 billion or less this year?

Mr. Sainsbury: I hope that we will all look forward to a steady increase in the proportion of cars sold in Britain that are produced in Britain, whether they are produced by Japanese-owned companies, American-owned companies, French-owned companies or British-owned companies. The export success is put in perspective if one bears in mind the fact that the first-quarter exports this year were nearly three times the level of the first-quarter exports of five years ago.

Mr. Nicholas Winterton: I pay tribute to the role of the motor industry in our economy, as my right hon. Friend has done, but can he say when we will reduce our growing deficit in manufactured goods?

Mr. Sainsbury: One way of reducing that deficit to which I draw the attention of my hon. Friend is by encouraging inward investors to come here and produce manufactured goods, as the Japanese car companies are doing effectively. Of course, if we are to retain our attraction as a location for inward investors, we must be seen to remain a central part of the European Community and must also avoid saddling our manufacturers with the social chapter.

Energy Projects (Merseyside)

Mr. Alton: To ask the President of the Board of Trade if he will make a statement on the development of energy projects in Liverpool bay and the River Mersey.

Mr. Eggar: Progress is a matter for the private sector, but we shall keep in close touch with developments on these projects.

Mr. Alton: Does the Minister accept that the development of the oil and gas fields in Liverpool bay could mark a crucial and significant turn in the economies of both Merseyside and Deeside? When is his Department likely to give final approval for the development of the gas


fields and what active role is it playing to try to ensure that the construction of the rigs necessary for the exploration and exploitation of the field is carried out at the Cammell Laird yard on Merseyside, where there is a desperate need for employment opportunities? Where would be a more fitting place than Merseyside for the construction of those facilities?

Mr. Eggar: The hon. Gentleman will be aware that during the coal review my right hon. Friend the President of the Board of Trade gave permission under section 36 for Connah's Quay to proceed. That in turn will have a significant impact on the economic viability of the find in Liverpool bay. It was quite remarkable that, although certain sections of the Liberal party gave their support, not a single voice was raised by the Liverpool Labour party in favour of proceeding with that project during the whole consultation process leading up to the coal review White Paper. It is recognised that the project would have led to at least 5,000 construction jobs. The Labour party should balance the energy demands of this country.

Mr. Richards: Will my hon. Friend confirm that it is only because of the Government's energy policy that Liverpool bay will be developed and that, if the Labour party had had its way, we would still be producing coal that no one wants?

Mr. Eggar: I agree with my hon. Friend and I pay tribute to the Welsh TUC which, at the last minute, made its position absolutely clear: it wanted the Liverpool bay development to go ahead.

Mr. George Howarth: In the light of his previous answer, will the Minister confirm that I wrote a letter to his right hon. Friend which bore the signature of every Labour Member on Merseyside and also the signatures of Liberal and Conservative Members urging him to go ahead precisely along the lines that he did during the period of the coal review? Will the Minister now apologise for this earlier statement? While he is on the subject, will he pull together Hamilton Oil, the Department and Cammell Laird and work out precisely what can be done to bring the orders for the oil drilling platforms to Cammell Laird—or is he prepared to see another Swan Hunter on Merseyside?

Mr. Eggar: rose—

Hon. Members: Withdraw!

Mr. Eggar: I should certainly be willing to apologise to the hon. Gentleman if the letter makes it quite clear that those hon. Members were willing to see the closure of mines as a result—[HON. MEMBERS: "Ah!"] Yes, but that is just the point. Opposition Members are not prepared to make hard and difficult choices. That is why they are in opposition and why they will remain in opposition.

Mr. O'Neill: Does the Minister agree that the Labour party in Merseyside has supported both proposals because it considers it necessary to have a balanced energy policy? That is why we also believe that the petroleum revenue tax changes may prejudice the prospect of any other inshore projects of the kind envisaged in the question. The Minister is misleading the House and the country when he suggests that this narrow and blinkered view of energy

policy, if that is what it amounts to, can produce anything like the share that the country requires between oil, gas and coal—resources which the country already owns.

Mr. Eggar: The hon. Gentleman is now on record as being against any restriction on the production of coal, being in favour of nuclear production and being in favour of the expansion of gas-fired electricity production. That is highly responsible from the Opposition Front Bench that seeks to form the Government of this country. I suggest that he makes those on the Benches behind him aware that it is necessary to make difficult choices. It is no good his coming to the Dispatch Box to ask for every single thing to proceed in order to persuade and make happy different sectors of his own party.

Manufacturing Industry (East Midlands)

Mr. Barnes: To ask the President of the Board of Trade when he will next visit the east midlands to discuss job losses in manufacturing industry.

Mr. Heseltine: I hope to visit the east midlands shortly. I expect to discuss a range of issues with manufacturing and other businesses in the region.

Mr. Barnes: The Secretary of State certainly needs to talk to a great number of people in the east midlands. In the shire county elections in the east midlands, Labour took 211 seats to the Conservatives' 134. We need investment in manufacturing industry in the east midlands, where investment is still below the 1979 level. Will the Secretary of State ensure that he has good talks with a host of people who might have ideas about what he should do?

Mr. Heseltine: I can give the hon. Gentleman an unqualified assurance. I will talk to Toyota at Burnaston which is creating 3,000 new jobs, to Toray Textiles at Mansfield which has created 400 new jobs, to Walkers and Sons in Leicester which has created 250 new jobs, to Land's End at Oakham which has created 100 new jobs, to Airwair of Woolaston in Northamptonshire which has created 70 new jobs and to Fisher Controls in Braunstone in Leicestershire which has created 66 new jobs. I can only say to the hon. Gentleman, who says that Labour has won all those seats, enjoy it while it lasts, because it will not be long.

Mrs. Angela Knight: Has my right hon. Friend seen the Price Waterhouse survey of Derbyshire firms, which was published last week, in which 80 per cent. of companies said that they were coming out of recession and that profits were improving and in which one third were proposing to increase their work forces? Does my right hon. Friend agree that we should congratulate those companies and that the way forward is through a closer partnership between the Government and manufacturing industry to help companies invest and so create the jobs that are needed in that area and elsewhere in the country?

Mr. Heseltine: My hon. Friend is right, but why is it that one only ever sees support for the things that are going right in Derbyshire from hon. Members on the Government side of the House?

Commodity Prices

Mr. Cohen: To ask the President of the Board of Trade what assessment he has made of the effect on businesses, consumers and trade of the recent changes in the price of commodities.

Mr. Sainsbury: The impact of movements in commodity prices varies between businesses.

Mr. Cohen: Following the exchange rate mechanism debacle eight months ago, which cost Britain about £2 billion, are not higher prices now in the pipeline? Is not that reflected by commodity price rises? Timber is up 126 per cent., sugar 46 per cent., coffee 38 per cent., beef—[HON. MEMBERS: "Reading."] Yes, reading. They are very high figures, are they not? Beef is up 35 per cent. and cotton 25 per cent. Will not that harm businesses and the standard of living of people on tight incomes and make the nation's economic recession worse? Are not the Government caught in a new web of recession of their own making?

Mr. Sainsbury: I hope that the hon. Gentleman will share the Government's view that the control of inflation is an extremely important objective and is very important to help manufacturing industry, particularly in export markets. I hope that he is also aware that food price inflation has been running at a very low level. It was only 1·5 per cent., which was lower than the general level of inflation in the year to March 1993.
The hon. Gentleman might not be aware that the chairman of one of our leading supermarket companies —indeed, I think that I can say the leading supermarket company in the country—recently forecast that true price inflation would increase from about 2 per cent. to 3 or 4 per cent. next year because of devaluation. We should like to see less, but that is not an astronomical figure.

Mr. Budgen: Will my right hon. Friend confirm that a devaluation affects only some prices, not all prices, and that inflation can be caused only by an increase in the money supply?

Mr. Sainsbury: I am happy to agree with the first part of my hon. Friend's question. As he knows, were we to embark upon a discussion of the second part of his question, it is possible that we would not find ourselves entirely in agreement and we would certainly take up much of the House's time.

Mr. Robert Ainsworth: Does the Minister recognise that the price of commodities to manufacturers is now tip more than 8 per cent., that that is a direct result of what happened in September and that we are in grave danger of going around the cycle again? When will the Government bring forward a policy for the long-term development and protection of our trade and manufacturing industry? That will be the only way out of the stop-go cycle.

Mr. Sainsbury: It sounds as though the hon. Gentleman is calling for not only regulation of trade but protection, or higher tariffs, against imports into this country, which of course would be an invitation to a trade war—just the thing in 1929 to 1931 reduced world trade by 40 per cent. and, as a consequence, reduced world output of manufactured goods by 30 per cent. That seems to be a more than usually stupid policy to be proposed, even by the Opposition.

Russian Federation

Mr. Fabricant: To ask the President of the Board of Trade what plans he has to meet his counterparts in the Government of the Russian Federation to discuss bilateral trade.

Mr. Heseltine: Deputy Prime Minister Shokhin, with whom I established contact at the first meeting of the British-Russian steering committee on trade and investment in Moscow last September, and I attended a second meeting of that committee this morning. We plan to continue our talks tomorrow.

Mr. Fabricant: Does my right hon. Friend agree that business with the Soviet Union, or Russia as it is today, is well worth pursuing in the long term due to its huge resources in gold and oil? Regarding of the short term, my right hon. Friend's meeting this morning with Aleksandr Nicolaivitch Shokhin, what does he think will be the short-term benefits that will accrue?

Mr. Heseltine: I must crave the indulgence of the House, Madam Speaker. I was so carried away by the full explanation of where I have been today that I missed the important part of the question.

Madam Speaker: In that case we will have a question from Dr. Howells.

Mr. Fabricant: rose—

Madam Speaker: Very well, but very quickly.

Mr. Fabricant: Thank you, Madam Speaker. Does my right hon. Friend agree that it is worth pursuing long-term prospects with Russia given its huge reserves of gold and oil? Given his meeting this morning with Aleksandr Nicolaivitch Shokhin, what short-term benefits does he believe will accrue?

Mr. Heseltine: I think that my hon. Friend, who has a considerable knowledge of these matters and a facility for articulating them, is right to ask the House this question. The conclusion that I draw is that we have much to gain in both the long and the short term.

Madam Speaker: It was worth a repeat performance.

Dr. Howells: Does the President of the Board of Trade agree that one of the greatest success stories of British exports to the former Soviet Union—to Kazakhstan and Russia—is that of British Gas? British Gas is deeply concerned that if it is broken up, as some propose it should be, it will no longer be large enough to be a world player and to take British exports to those countries.

Mr. Heseltine: The hon. Gentleman will realise that these matters are currently before the Monopolies and Mergers Commission. It would therefore not be appropriate for me to comment at this stage.

Overseas Trade Services

Mr. Matthew Banks: To ask the President of the Board of Trade how many people the Overseas Trade Services employs; and if he will make a statement.

Mr. Needham: At present, there are some 2,000 staff engaged in export promotion work within Overseas Trade


Services, including those employed in the commercial sections of Foreign and Commonwealth Office posts overseas.

Mr. Matthew Banks: While Britain currently enjoys record export levels, is my hon. Friend satisfied that we are doing everything possible to ensure that there is a proper range of services to help British business men win the orders that they rightly deserve?

Mr. Needham: One can never be satisfied. My right hon. Friend the President of the Board of Trade recently announced a new structure within the DTI which I think will go a long way towards meeting the needs mentioned by my hon. Friend. We have restructured the Overseas Project Board—and are in the process of doing so with the British Overseas Trade Board—to reflect business needs more closely. We have announced the taking on of 100 export promoters, of whom 33 are in place. We are strengthening the relationship between the Foreign Office and the DTI through the joint directorate and linking export promoters with DTI regional offices and, thereafter, this country as a whole. I am sure that, in a short time, we will be giving a package of support to our exporters which will be without equal anywhere in the world.

Mr. Barry Jones: Will the Minister acknowledge the competitiveness of the British aerospace industry, which exported £5·5 billion worth of its products last year? May I tell the Minister of a great little export earner in my constituency, the 125 executive jet made at the Broughton works? May I further tell him of the concern of the work force there—not just worry at the loss of 269 jobs from the production line, but fear that that efficient unit may soon be bought, lock, stock and barrel by an American company? What can the Minister do to assuage the fears of the work force? Is he prepared to visit the factory and to meet management and labour?

Mr. Needham: My right hon. Friend has already visited the plant. Obviously it will be a commercial decision for British Aerospace. The hon. Gentleman is absolutely right to congratulate the British Aerospace company and its subsidiaries—and all other companies in aerospace—on the success of their exports, which I am sure will continue.
We can be proud of many other industries in this country, whose export performances are getting better day by day.

Mr. Jacques Arnold: Can my hon. Friend assure us that there will be adequate staffing to ensure the proper packaging of exports of British goods and services, as was carried out in the Kuwait reconstruction and the recent Proyecto Venezuela? It is a very effective way of putting across opportunities for Britain in these markets.

Mr. Needham: My right hon. Friend recently announced an additional 60 posts to deal with the 80 top markets for British exports. As I have said, we are in the process of putting in place an export promotion assistance package that no other country in the world can better.

Export Credits Guarantee Department

Mr. Spellar: To ask the President of the Board of Trade if he will make a statement on the staffing levels in the Export Credits Guarantee Department.

Mr. Heseltine: ECGD's staffing levels are periodically reviewed and determined as part of the annual public expenditure survey and the Minis scrutiny.

Mr. Spellar: I think that it is unfortunate that the right hon. Gentleman could not be more forthcoming on the figures. One suspects that that gives substance to the concerns expressed by the staff of ECGD on this matter. Although an increase in the amounts available is welcome, would not it be a good idea to give an assurance to the staff that their jobs will be secure and that we will therefore have the necessary back-up to progress what will, one hopes, be an increase in exports?

Mr. Heseltine: I cannot answer that question in the way in which the hon. Gentleman wants. I have looked in great detail at the number of people employed in providing this service. I was extremely concerned at the overheads involved in providing support to the front-line services and, therefore, I have asked for some urgent reviews to take place, which it is my proper responsibility to do.

Northern Cyprus

Mr. O'Hara: To ask the President of the Board of Trade what was the total value of (a) imports and (b) exports between the United Kingdom and northern Cyprus in the last three years for which records are kept.

Mr. Needham: The Government do not recognise the northern Cyprus regime. Therefore, northern Cyprus is not separately identified by Customs and Excise in the United Kingdom trade statistics.

Mr. O'Hara: Is not it the case, as the recent exploits of Asil Nadir brought to public attention, that a considerable amount of trade goes on between the United Kingdom and northern Cyprus? Should not the Government now take a closer interest in the terms under which such trade is conducted? In particular, how many of the business assets through which that trade is conducted belong legally to refugees who were dispossessed in 1974? is not it an insult to those refugees that in the last honours list an OBE was awarded to a northern Cyprus business man for his services to trade with the United Kingdom? Should not the Government now review their policy of accepting export credit certificates from a regime which the United Kingdom does not recognise and which evidently does not recognise any obligations to the United Kingdom?

Mr. Needham: The hon. Gentleman is fully aware that the trade that takes place between the island of Cyprus and the United Kingdom is regulated through the association agreement with the Community and, therefore, is a Community matter. We recognise the island of Cyprus as a whole and it would be unthinkable to the people on the rest of the island if we differentiated between one part and another.

Manufacturing Industry

Mr. Harry Greenway: To ask the President of the Board of Trade what assessment he has made of the parts of manufacturing industry which show the greatest potential for growth; and if he will make a statement.

Mr. Sainsbury: The Department's objective is to encourage and assist all sectors of the United Kingdom's manufacturing industry to become more competitive both at home and abroad.

Mr. Greenway: Can my right hon. Friend confirm that between 1 million and 1·5 million more people are in work now than were in work in 1983? That means that more than 25 million people are in jobs in the United Kingdom. Are not a substantial number of those in the manufacturing industries? Will my right hon. Friend encourage small business—while not neglecting large business—to provide jobs, because that is where a large potential for increase in manufacturing jobs lies?

Mr. Sainsbury: I very much agree that smaller businesses have a valuable role not only in manufacturing industry but in the provision of employment opportunities. Indeed, that is why the Government have a comprehensive range of services to assist small firms, including the small firms loan guarantee scheme, which was enhanced by my right hon. Friend the Chancellor in the Budget; consultancies under the enterprise initiative; one-stop shops, which will give a better service to small firms; and the partnership sourcing initiative.

Mr. Campbell-Savours: Why should not regional policy be framed in such a way as to back growth sectors of the economy? On the whole question of regional policy, when will we have a statement from the Government on the redrawing of the assisted areas map? It is causing deep concern in my county of Cumbria.

Mr. Sainsbury: I can understand why the hon. Gentleman is concerned to have an announcement—we will certainly make one as soon as we can. He is aware that the proposals for the new map for assisted areas are subject to the approval of the Commission. We can never be sure how long the Commission will take to give us that approval, as I drew to the attention of the House in answer to an earlier question.
The hon. Gentleman is well aware that regional policy is directed at providing better employment opportunities in areas of the country that suffer from a lack of employment opportunities relative to other more prosperous areas.

Arab Boycott

Mr. John Marshall: To ask the President of the Board of Trade what representations he has received about the implications of the Arab boycott on British exports.

Mr. Needham: I receive representations about the Arab boycott from time to time, but we cannot measure its effect on United Kingdom exports.

Mr. Marshall: Does my hon. Friend accept that such an iniquitous boycott must affect the level of United Kingdom exports? As the German and American Governments are willing to legislate against the boycott, will he explain why the British Government will not? May we have an assurance that the matter will he discussed at the forthcoming G7 conference?

Mr. Needham: I cannot give such an assurance to my hon. Friend, but I will make sure that his comments are passed on. We have not followed the line taken by the Governments of the United States or Germany because in this matter we take the views of British companies and exporters carefully into account. Those companies do not believe that the introduction of such legislation in this country would be effective, because it would be unenforceable.

Deregulation Unit

Sir Thomas Arnold: To ask the President of the Board of Trade if he will make a further statement about the work of the deregulation unit.

Mr. Neil Hamilton: Departments are conducting a comprehensive review of all their regulations. Seven business task forces are also undertaking a comprehensive review of all the regulations that affect those industrial sectors. We are also urging the European Community to consult business and consider the burden that its proposals might impose on it. At the local level, there are nine partnerships between local authorities and business in local areas. Local authorities and business are trying to learn from their experience of working with one another.

Sir Thomas Arnold: Will my hon. Friend encourage the civil service unions to be less defensive about the proposals and remind them that public service efficiency will be enhanced by the work of the unit?

Mr. Hamilton: I agree with my hon. Friend. There will ultimately be gains for the Government, and hence for the taxpayer, from the deregulation initiative. It can be in nobody's interest to have red tape entangling them. Nor is it in anyone's interest to have taxpayers' money wasted on unnecessary rules and regulations.

Abortion Clinics (Access)

Mr. Harry Cohen: I beg to move,
That leave be given to bring in a Bill to prohibit interference with, and intimidation or harassment of, any person using an abortion clinic or any person employed therein, and the obstruction of access to such premises; to provide remedies for persons affected by such acts; to require information on counselling services to be given to persons seeking an abortion; and for connected purposes.
The activities referred to in the Bill should be written into our law as a clear criminal offence. When it boils down to it, such activity is another form of violence towards women, in this case women who are already in an anxious state.
Abortion is legal. It is outrageous that, after making a painful and difficult decision, perhaps after careful counselling and discussion with their partner, women attending clinics for treatment should be the subject of abuse and harassment and placed in fear of violence. The same goes for clinical workers.
Seven weeks ago, Rescue America despicably forced several women to run the gauntlet of its abuse and intimidation. A report of that appeared in The Guardianon 2 April. One woman said:
I couldn't believe the way they just descended on me. They swarmed around me and I was very frightened.
When she arrived at the clinic, she burst into tears. She said:
Having an abortion is not an easy decision and I was already feeling emotionally unstable. These people just took advantage of that. I was shaking and crying and had to go and sit in a room to calm myself down …They are not going to achieve anything like this. Women think very carefully about having abortions and these people are not going to change anybody's mind. I think they are all sick and very intimidating. I believe that everyone has the right to hold an opinion but these people hounded me. I felt like a criminal and am still very disturbed by what happened … It was very distressing and occurred at a time when I have enough to worry about already.
Those were the words of a woman who was harassed by Rescue America.
The activities of Rescue America and Rescue Outreach are becoming increasingly violent in the United States. The groups do not merely block access. They have undertaken fire bombings, arson attacks and acid attacks on clinics. They have stormed hospital theatres. There have been shootings. A Florida doctor was shot dead outside his clinic earlier this year. The director of Rescue America, Don Treshman, called it "unfortunate" and added chillingly:
had he not been killed, many more babies would have died at his hands.
Last year marked a record for violence against clinics in the United States. There were 1,107 acts of serious violence such as bombing, arson, chemical contamination, invasion and vandalism. It cost almost $50 million. Special camps were set up to train members to read licence plates, follow people and harass them at home, and illegally enter schools to leaflet children with pictures of foetuses.
With such fanaticism, there must be a real danger of harm to women arriving at abortion clinics and to the workers there. The people involved are trying to export this intimidation and violence to the United Kingdom. They have set up Rescue UK, and training courses have been organised by their American counterparts. These include instruction on how to intervene physically, with

violence. James Morrow, the founder of Rescue UK, has been arrested more than a dozen times, and in 1989 he was convicted of assault on a pregnant clinic manager.
I believe that, for infamy and ignominy, the demonstrations that took place outside abortion clinics seven weeks ago were on a par with those of the racist dockers in the 1960s. The rights of women should be protected by law, yet the role of the police was far from satisfactory. They did not ensure complete freedom of access or freedom from intimidation. They put the demonstrators first and the women second. At some demonstrations, they refused to allow women to go through on their own, despite the fact that these women were engaging in lawful personal business, and, on grounds of public order, they also refused to allow escorts, such as those from the National Abortion Campaign, to accompany the women.
With such tactics, the police were, in effect, doing Operation Rescue's job for it. It is also known that some of the police officers involved expressed their support for Operation Rescue. Policing tactics were inconsistent, being down to individual police officers. That is most unsatisfactory. The Home Office should produce some consistent guidelines and ensure that women's rights are paramount.
In our democracy, anti-abortion groups have the right to demonstrate. They can lobby Parliament and march through London or any other town. However, they should not be allowed to abuse individual women who, having made an often painful and difficult decision, are attending clinics for treatment that they are, by law, allowed to have. Threatening individual women who are seeking treatment is cowardly. My Bill puts the women's rights and their safety first. It creates a clear criminal offence where there is intimidation or where people's access is blocked.
It is necessary to give women a choice at an earlier stage, when they are considering what to do. That is why my Bill puts on general practitioners an onus to inform women what sort of counselling is available and might be helpful to them. Violent demonstration and intimidation should be no part of the process. The Home Secretary was right to have Don Treshman of Rescue America arrested and deported on the grounds that his activities were not conducive to the public good. However, that was not a satisfactory mechanism. In any case, we have our own home-grown intimidation and women bashers. Nor are obstruction laws the right ones to use in these circumstances. We saw how the police implemented those laws: they prevented women from securing their legal rights. We need a clear-cut law making it illegal to block access to abortion clinics.
It is ironic that one outcome of these incidents is that demonstrations in the royal parks are not acceptable. In the interests of the women and clinic workers, demonstrations outside abortion clinics should not be acceptable. We should have this law in place before these dangerous fanatics return in September, as they have vowed to do.
The Bill is supported by the National Abortion Campaign and the Abortion Law Reform Group. Last week, one anti-abortion hon. Member tabled a motion on obscenity. It urges the Government to balance freedom of speech with their responsibility to protect children, women and men from degradation and violence. I similarly seek to protect women who are lawfully using abortion clinics


from this latest form of violence by anti-abortion extremists. An editorial on this issue in The Independent concluded with these words:
Women should know that they can have abortions within the law without fear of intimidation or more distress than they will in any case experience.
My Bill enshrines that.

Mrs. Ann Winterton: I wish to oppose the motion. The hon. Member for Leyton (Mr. Cohen) raised a number of important issues on which opinions in the House and outside are deeply held and strongly felt.
I share the hon. Gentleman's concern about the recent scenes that we have witnessed outside both abortion clinics and the administrative headquarters of those who advocate abortion. Those of us who are members of the all-party parliamentary pro-life group have no truck whatever with those individuals or organisations, whatever their views or philosophy, who advocate violence, intimidation or the flouting of the law as a means of furthering their ends.
That rejection of violence and intimidation applies to those from the Socialist Workers party and the National Abortion Campaign who have turned up with the deliberate intention of disrupting peaceful demonstrations, rallies and religious services. It applies equally to those who share our abhorrence of abortion but adopt methods with which we have no sympathy and to which we give no support.
Our opposition to the criminal destruction of property in abortion clinics is as strong as our opposition to the destruction of property that took place during the debate on the Bill introduced some time ago by the hon. Member for Liverpool, Mossley Hill (Mr. Alton), when the headquarters of the Society for the Protection of Unborn Children was ransacked by pro-abortion extremists. Our opposition to assaults on any person seeking or advocating an abortion is as strong as our opposition to the sort of cowardly attack which was perpetrated some time ago on the then Father of the House and right hon. Member for Castle Point, Sir Bernard Braine, who was assaulted by a gang of pro-abortion thugs outside a prayer meeting at the Royal Albert hall.
I hope that I have shown that there is some common ground between myself and the hon. Member for Leyton, but despite our common rejection of violence as a means of achieving political change within our parliamentary democracy, I cannot support his appeal. Violence and intimidation are already illegal in this country, as indeed are crimes against property. There already exists a wide range of powers available to the courts to deal with such activities, whether they take place outside abortion clinics or outside factories.
I wonder whether the hon. Gentleman would be so keen to ask for tougher action against those on the Timex picket line? The law surely must be applied firmly, but fairly and equally, to protect all who seek to exercise their right to demonstrate peacefully, and to prevent violence and intimidation wherever it arises.
The hon. Member for Leyton seeks also to liberalise still further the Abortion Act 1967 by creating a new requirement to provide information and counseling

services, which suggests that there is a right under present legislation to have an abortion. That is not the case. The legislation merely provides a defence against prosecution if abortion is performed under one of a given set of circumstances. It does not provide for a right of access to abortion.
That is an important legal point, because it is now common practice to interpret the legislation differently, with many doctors openly operating a policy of abortion on demand. The result is that more than 90 per cent. of abortions are performed for reasons of social convenience. A staggering 3·7 million abortions have now been performed under the terms of the Abortion Act. Of those, only 151—or 0·004 per cent.—were performed in emergency to save the life of the mother.
The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), when he promoted the legislation 25 years ago, told us that abortion would liberate women and make every child a wanted child. The opposite has been the effect. Abortion has allowed society to sweep under the carpet the very problems for which it was hailed as a panacea.
Abortion has failed abysmally. It allows the continuing exploitation of women and their health and, as the inexorable increase in child abuse has shown, the devaluation of human life before birth has altered society's attitudes to children after birth. The hon. Member for Leyton and those who profess their faith in the nostrum of liberal abortion laws can now look back on 25 years of failure, of the exploitation of women, and of the slaughter of unborn children.
For those reasons, we should not give the hon. Member leave to bring in his Bill. Those listening to what is said today should take note of the fact that a decision not to divide the House should not be taken to mean support for this measure. It is simply a sign that there are many important issues on today's Order Paper—issues on which hon. Members want to make progress without wasting time by dividing the House over an issue which is little more than a stunt to enable those who share the hon. Gentleman's extremist views to curry favour with their supporters in the pro-abortion lobby outside the House.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.

Bill ordered to be brought in by Mr. Harry Cohen, Mr. Tony Banks, Mr. Jeremy Corbyn, Ms Jean Corston, Mr. Bill Etherington, Mr. Neil Gerrard, Mr. Ken Livingstone, Mr. Eddie Loyden, Mr. Bill Michie, Ms Dawn Primarolo, Mrs. Barbara Roche and Mrs. Audrey Wise.

ABORTION CLINICS (ACCESS)

Mr. Harry Cohen accordingly presented a Bill to prohibit interference with, and intimidation or harassment of, any person using an abortion clinic or any person employed therein, and the obstruction of access to such premises; to provide remedies for persons affected by such acts; to require information on counselling services to be given to persons seeking an abortion; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 2 July and to be printed. [Bill 199.]

Opposition Day

[12TH ALLOTTED DAY]

Automated Credit Transfer

Madam Speaker: There is a great deal of interest in the two debates today. I appeal to hon. Members for short speeches. I am not in a position to put a time limit on speeches, but I do ask for co-operation from hon. Members when they are speaking.
I have selected the amendment standing in the name of the Prime Minister.

Mr. Donald Dewar: I beg to move,
That this House calls on Her Majesty's Government to make clear without qualification that the use of Automated Credit Transfer in the payment of pensions and benefits is a decision for the free choice of the individual customer and that there will be no element of compulsion or undue pressure from the Department of Social Security; and condemns the uncertainty for customers that has resulted from the Government's current campaign on Automated Credit Transfer and the threat to the important social and economic role in the community of sub-post offices which is being undermined by this Government's mismanagement of the economy and its determination to pave the way for privatisation.
This is a debate about choice and about fairness. I want to make it clear at the beginning that I am not arguing against the use of automated credit transfers. That option is properly available to clients of the DSS and is used by them in increasing numbers. Our case is essentially that the method of paying pensions is a matter for the customer, and for that person alone.
Replying to the Adjournment debate last Thursday, the hon. Member for Tatton (Mr. Hamilton) said that scaremongering is behind this campaign. That was an irresponsible statement. The basis for this debate is the widespread and genuine concern that has been reflected in the mail of every hon. Member, irrespective of party. This is particularly an issue in rural areas, but not only in rural areas.

Mr. Phillip Oppenheim: I thank the hon. Gentleman for his courtesy in giving way. Does he recollect that a couple of years ago his hon. Friend the Member for Livingston (Mr. Cook) went around the country telling the sick and the elderly that the new GP contract would lead to doctors spending less time with patients? That proved untrue. It was a scare story put around for party political ends. Is not this story out of exactly the same mould?

Mr. Dewar: No. The hon. Gentleman's question was a rather clumsy attempt at a diversion. I at least intend to speak about the subject of the debate.
The cause of the dissent is the open determination of the Government to encourage the use of ACT and the methods that have been used to promote that. We must be clear about the complaint. The starting point is the decision to review the form sent to those who have become eligible for retirement pensions inviting them to opt for a method of payment. Three types of form have been tested,

each sent to 8,000 customers. That in itself is not sinister, and Ministers have persistently offered reassurances to customers.
A typical example was the Under-Secretary of State for Technology in the Department of Trade and Industry, who on 19 April wrote to my hon. Friend the Member for Fife, Central (Mr. McLeish). He said:
I understand that all three versions of the form made clear to recipients that there was a choice of payment methods.
The Minister may understand that—he can understand what he likes—but the forms do not do that, and that is the essence of our complaint.
The first version is the one that clearly sets out the options. As well as variations of ACT, it contains a clear invitation to opt for post office payment. The recipient is invited, if he or she wishes, to complete a form specifying the post office that is to be used. That is fair enough, but the second version is quite different. The first page is an extensive sales pitch for ACT and the page contains no mention of a post office order book.
On the section that is to be completed to indicate choice, there is an extensive invitation to opt for ACT. People have to read what can properly and fairly be described as a footnote which says that people may express an interest in payment through a post office. If people say yes to that method, they are told that they will receive a letter about it, which is hardly an open invitation.
The third form which has been distributed and market tested is even more ingenious. There was a four-page hard sell for ACT alone, and again the alternative was relegated to the small print. This time it merely states:
Do you want to be paid by other means?
At no point was post office payment mentioned. Those who stood firm and expressed interest in other means were told that they would be written to—to what effect is not yet clear.

Mr. Patrick Nicholls: Does the hon. Gentleman accept that, whatever retrospective deficiencies there may have been in some pilot forms, the Government have made it obvious on every occasion that it is up to the customer to decide? The hon. Gentleman said that he accepted that ACT was used and that many people want to use it. Therefore, his position is exactly the same as that of the Government and he does his personal reputation no credit by indulging in the scaremongering that has been going on.

Mr. Dewar: I am sure that the hon. Gentleman recognises that, if I am scaremongering, then over the past week the hon. Members for St. Ives (Mr. Harris), for Taunton (Mr. Nicholson), for Gravesham (Mr. Arnold), for Rochford (Dr. Clark), for Corby (Mr. Powell) and many other hon. Members have been scaremongering as well. But they have not: they are reflecting the genuine worries of their constituents, and the hon. Gentleman should recognise that.

Mr. Jacques Arnold: Will the hon. Gentleman give way?

Mr. Dewar: Of course I will, as I mentioned the hon. Gentleman.

Mr. Arnold: Although the hon. Gentleman mentioned me, he clearly did not hear what I said. In the debate last night I said that it was quite reasonable for the Government to issue samples to test the reaction to


different forms. The clear response was that people wanted to continue to be paid through the post office. The sampling is quite in order. I did not engage in scaremongering.

Mr. Dewar: rose—

Hon. Members: Withdraw. [Interruption.]

Mr. Dewar: The flying picket for debates such as this is in the Chamber. Hon. Members will have to live with the fact that it beggars belief to argue, as the hon. Member for Teignbridge (Mr. Nicholls) argued, that in retrospect there might have been an odd mistake but, basically, the whole thing was well intentioned. There was a deliberate attempt to restrict choice by withholding information, and there is no escape from that.
If it is suggested that that was some sort of idle exercise carried out on a dull afternoon by a civil servant on a whim which meant nothing, we are being asked to believe the unbelievable. The Secretary of State for Social Security allowed his enthusiasm for ACT to override common sense and sought to persuade a large number of people to opt for it by suggesting that that, in effect, was the only option open to them, and that borders on the dishonest.

Mr. William O'Brien: Will my hon. Friend add to his sentiments the representations that I have received from hundreds of my constituents and those of thousands of other constituents who have written to their Members of Parliament? There is no scaremongering. People are concerned about the devious way in which the Government have approached the issue. It should be impressed upon Conservative Members that this is a serious matter about which millions are concerned.

Mr. Dewar: I agree with my hon. Friend. I am not aware of the results of the test, but I need not be fearless and run risks to predict that those who were given the form that did not even mention the post office option almost certainly opted in much larger numbers for ACT, and that was the whole point of the exercise.

Mr. Stuart Randall: Is my hon. Friend aware that the Government have let the cat out of the bag by stating in their amendment that their aim is to reduce cost, and they are doing that by forcing people to use the means of payment that they wish them to use, which is causing great resentment throughout the country? It shows the Government's ruthlessness that they are prepared to disregard the wishes of the British people in order to reduce costs.

Mr. Dewar: I agree with my hon. Friend.

Several hon. Members: rose—

Mr. Dewar: I take this opportunity to say that I heed your statement, Madam Speaker, about the need for reasonably short speeches. If I give way constantly, I shall stop others speaking. Therefore, I shall give way once or twice in a little while, but—

Dame Elaine Kellett-Bowman: Will the hon. Gentleman give way to me?

Mr. Dewar: I cannot resist that.

Dame Elaine Kellett-Bowman: I have the three forms here and all of them say:
Ask at your local post office".

Mr. Dewar: I have the forms here. [Interruption.] The hon. Lady has made a point that I cannot confirm. What I have here is a form that has on the front page a hard sell for ACT and, on the second page—what one might call the executive section—an invitation to go for ACT. At the bottom it says:
Do you want to be paid by other means?
Against the yes box it says:
We will write to you about this".
Is that a fair and unbiased attempt to offer choice?

Mr. Gyles Brandreth: rose—

Mr. Dewar: It is as if, if I may say to the hon. Gentleman who is looking so keen, at one of the excellent restaurants in his city, six items were provided by the kitchen and there was to be a fair choice, but only five were put on the menu and then surprise was expressed that no one had opted for the sixth—of course, because no one knew it was there. It is that kind of weighted choice that is deplorable.
It is the Secretary of State who will reply to the debate, so he must tell us what the test was about. What was it meant to achieve? If it was not a whim or a joke, if it was not something done, as I say, to fill an afternoon, what on earth was it all about? Why should we not believe the point that has been put by many of the Secretary of State's right hon. and hon. Friends—certainly by his hon. Friends—that it was no more than an attempt to weight
choice?
The Secretary of State will remember that it was the hon. Member for Rochford who said—I paraphrase—that the only conclusion that he could draw from what had happened was that it was a way of discovering how the wool could most effectively be pulled over the eyes of the customer. That was the considered view of a responsible Conservative Back Bencher and someone to whom the right hon. Gentleman should pay attention.
Let us consider in passing a little of the history of the matter and take, for example, the reply given to a parliamentary question on 12 March by the Under-Secretary of State for Social Security, the hon. Member for Maidstone (Miss Widdecombe). She said:
Post Office Counters Limited was made aware of the trial."—[Official Report, 12 March 1993; Vol. 220, c. 751.]
That is true up to a point; but it was not made aware of what was happening in detail or the form that the trial would take.
A letter that I received from Mr. R. T. B. Dykes, who I understand is managing director of Post Office Counters, is of interest in terms of the honesty and openness with which the matter has been handled. There was a discussion with Post Office Counters last September, when it was told—and this came as no surprise, according to Mr. Dykes—that the Government were examining possible ways of increasing ACT penetration. Mr. Dykes writes:
At that stage there were no firm plans and our negotiators requested details of the nature, location and timing of any trials of such new approaches. We also stressed to DSS that it was essential that we be provided with as much information as possible of their plans, as they would be a source of considerable concern both to Counters and to the National Federation of Sub-Postmasters.
There the matter rested for two months until December 1992 when DSS told us that they had been specifically targeted to increase ACT take up from its current level of 14 per cent. to 20 per cent. by 1995–96. When Counters asked how they proposed to do this their response was vague, but they repeated that they would be seeking to trial new claim


forms, as well as extending ACT to groups to which it was not available. Our negotiators repeated their request for details of their plans. We heard nothing more until 2 March
when they were told by the National Federation of Sub-Postmasters that they had found the forms in circulation.
I also have to tell you that our requests for information on the outcome of the trial have been rejected by DSS and that they have refused to give us any details of their plans for Mailshots to existing beneficiaries.
I hope that this letter will reassure you that we had no involvement in, nor were we consulted about, the trial of which you rightly complain. It does seem to me that DSS have been less than straightforward in their handling of this matter, and I have expressed my extreme concern about this issue to Michael Bichard, the Benefits Agency Chief Executive
I express my concern also on behalf of the Opposition, and of a large number of Conservative Members. Some Conservative Members accuse us of scaremongering, but that account learly shows that Mr. Dykes and his colleagues at Post Office Counters believed they were kept deliberately in the dark—and I put it at at least that. No one can say that we have been scaremongering in raising the matter on the Floor of the House.
Ministers should remember the Government's rhetoric. We hear about choice, protecting choice, level playing fields, and open government. Over the past few months, we have seen an example of the reality—and that is very different from the rhetoric. One cannot exercise choice if one has no knowledge of the options available.

Mr. Geoffrey Dickens: I hope that the hon. Gentleman will not be embarrassed if I congratulate him on securing this debate, which will give the House a chance to reassure all the people who are frightened that they will be unable to collect their benefits at a post office in future and all the sub-postmasters and mistresses who are worried about their future income.

Mr. Dewar: I also take that point seriously. This is an important debate. The only scaremongering is the scare that has been put into the Government by the public campaign and the campaign in the House, which will force the Government to abandon their clear strategy and underhand tactics. I repeat the words of the hon. Member for Rochford on Thursday night:
The forms are designed to discover how effectively the wool can be pulled over the eyes of those who receive pensions and benefits."—[Official Report, 13 May 1993; Vol. 1034, c. 224.]
In the same debate, the hon. Member for St. Ives made it clear that he does not believe it was a fair example of market testing, when people were not told the options open to them.

Mr. Richard Tracey: Will the hon. Gentleman unequivocally deny that the words
Ask at your local post office
are on each of the forms?

Mr. Dewar: No. What I am saying is that the forms are totally misleading and totally weighted. If any reasonable people had read form B or form C, they would, in my view, have come to the conclusion that they were expected to go for automated credit transfer and that that option was being forced upon them; of that there can be no doubt at all. That is the view of sub-postmasters, Conservative Back

Benchers, the media and Post Office Counters. Frankly, that would have been the view of any sensible person who, as a potential customer, had read the forms.
The Minister may be reduced to making the charge that we are scaremongering, but let me remind him that a third of the business of Post Office Counters comes from the Department of Social Security. Let us not forget that all the talk of broadening the base to replace the custom that would have been lost by post offices boils down to the suggestion that, at some future point, post offices may be allowed to sell national lottery tickets. That may be a good idea. I do not object to it. However, it would have been highly speculative compensation for the loss of business that would have resulted from the artificial restriction of choice that was invited and planned for in the forms to which I referred.
The importance of rural post offices—their place in the community as a point of contact and as an information exchange—will not be challenged in this House. I do not pretend that each of them is a place of romance and mystery that would find its place conveniently in a Hovis advertisement, but I know from personal experience and from the many people to whom I have spoken that post offices are valued and are regarded as integral and important parts of the community.
Rural communities are fragile, in some cases because of the actions of this Government. I am thinking of the way in which small pharmacies have been treated and of the way that rural bus services have been treated. There is now the potential, as a result of this strategy, to undermine local post offices.
The hon. Member for Gainsborough and Horncastle (Mr. Leigh), the Under-Secretary of State for Technology, claimed in his letter of 19 April fully to understand the importance of DSS transactions to post offices, but he went on to argue that the DSS is required to deliver its benefits as economically as possible. Of course I understand the importance of economy. As the Minister knows, in the past few months there has been a devastating series of reports—from Select Committees, the National Audit Office, and the ombudsman—pointing to the inefficiency with which his Department operates and delivers its services.
I certainly want to see increased efficiency, but wider considerations ought to be borne in mind in a policy area such as this. I do not believe that we should try to trick —I believe that is a fair way of putting it—people into taking one option at the expense of another by excluding information when its exclusion would do so much damage to the structure of our communities.

Mr. Dafydd Wigley: We have heard a great deal about extension of choice as the rationale for this survey, but does the hon. Gentleman accept that some people will lose choice altogether if the result of small rural post offices losing business is that they close down and people have to travel many miles to find alternative facilities? Is it not more important to ensure that that basic choice remains, and that if there is to be a loss of revenue to post offices as a result of ACT, the making up of that revenue must be guaranteed to allow post offices to stay in business?

Mr. Dewar: I certainly agree with that. It was the reason for the anger, discontent and unease that was so evident on the Conservative Benches until the whippers-in got to work for the purposes of this afternoon's debate.
I do not believe that efficiency must equate with a demolition job on the traditional role of sub-post offices. That, I believe, was the point of the intervention by the hon. Member for Caernarfon (Mr. Wigley). The Minister set out his stall on many occasions, arguing for ACT. The Federation of Sub-Postmasters is entitled to put forward its points about the convenience and friendly services offered by post offices.
Perhaps I could be allowed the luxury of saying that it is not just a question of rural post offices. My constituency, which borders the marches of western Glasgow, is a housing scheme constituency. There is great distress there and a genuine feeling of social loss when a post office closes. If we take the classic peripheral housing schemes in my city of Glasgow—I am thinking of Drumchapel, Castlemilk and Easterhouse—in which between 70,000 and 80,000 people live, there is only one bank in each scheme and there is not a single building society in any of them. Therefore, sub-post offices have an important role. Even after the substantial closures—more than 2,500 since 1979—there are still more sub-post office outlets than are provided by the four big banks in England and Wales and the six top building societies put together.
There are many reasons why we should be careful to preserve the local post office system, including the potential for bank charges. Lord Henley, the Minister in the House of Lords for the Department of Social Security, said in a recent letter, which I have read:
The banks have not yet introduced charges and indeed some of them have recently said they do not intend to do so.
The news that some have not yet and that some may not introduce charges hardly has the ring of confidence as to what may happen if we lose our national network.
Another problem is that of weekly payments. If one believes that an electronic notebook is an essential sign of civilisation, one may not have much sympathy with the idea that people budget on a weekly basis. However, many of my constituents do not want to be paid four weeks in arrears or once in 13 weeks. They want to ensure that the ACT scheme does not go ahead.

Mr. Giles Radice: Will my hon. Friend give way?

Mr. Dewar: I hope that my hon. Friend will forgive me if I do not give way; I have already spoken for longer than I intended.
Conservative Members may talk about scaremongering, but when they see that the Government are in trouble or as soon as they see that a Minister is low in the water, the immediate cry is, "It is scaremongering" or, "He must be an innocent victim." However, I have never seen a less innocent victim than the Secretary of State for Social Security. He planned a little job by stealth, he has been found out, and he should pay the price.
It is not only Labour which is suggesting that the situation is serious. Hon. Members will be aware of the views of Mr. Bill Cockburn, the chief executive of the Post Office, who suggested that, if the wrong forms emerged from the test—why were they being tested if not for possible use?—as many as 5,000 post offices could be forced to close. He said:

If such a thing were to happen, the entire network of post offices would be on the line.
That is not an irresponsible scare story concocted by Labour. We are taking up a cause that is well documented and an anxiety that is very real.
I know that ACT is growing. My objection is that the Government should not try to encourage it artificially by withholding information. The right to choose is important. The Minister should support that idea, but he cannot if the choice is not properly explained. In the rush for economy, he has been prepared to manipulate and mislead, and that is a serious matter which the House should consider.
Are the Conservatives who are protesting today happy that £3·5 million will be spent in 1993–94 on encouraging the growth of ACT? Certainly one can buy a lot of persuasion for £3·5 million, but one should not do so in the underhand way in which this operation was mounted and launched.
The Minister tells us that there is nothing to fear. He may be right. He may favour the view of the hon. Member for Corby, who, during the spring Adjournment motion debate on 18 May, said:
Frankly, it is incredible that the Government have got themselves into this absurd position. The heads of those who were responsible for drafting the extremely maladroit letters —to put the matter mildly—should be presented on a plate. It is one of the most serious political misjudgments, and a matter that my right hon. Friends must do much more to correct at once. These things did not happen when my right hon. Friend the Leader of the House was responsible for the Department which seems to be at fault in this case."—[Official Report, 18 May 1993; Vol. 225, c. 178.]
That is another ringing vote of confidence for the Secretary of State for Social Security! If that is the explanation—that it is bungling, maladroit, incompetent and stupid—perhaps the right hon. Gentleman would prefer to plead guilty to the underhand dealings which I suspect are the truth of the matter.
The Prime Minister is now offering assurances of his commitment to retain a national network of post offices. The hon. Member for Bedfordshire, South-West (Mr. Madel) is reported in The Times today as saying:
that clear statement … will dispel all anxiety".
I must tell the Secretary of State that all anxiety will not be dispelled—[Interruption.] Let me finish my sentence. All anxiety will not be dispelled by a generalised statement of that kind—of the kind that we have so often heard. I want the anxiety to be dispelled and the fears laid to rest. It was in order to give the Government a chance to do that that we initiated the debate.
I understand that the hon. Member for Bedfordshire, South-West—again, I have to rely on The Times for my information—was called in by the Secretary of State to hear of his revised proposals. That implies that the Secretary of State has now, late in the day, admitted that his proposals need revision. If there are revised proposals, it is appropriate that the House should hear them now.
I want the Secretary of State unashamedly to save his skin by backing down and doing another U-turn—the Government have had plenty of practice at that. It is in the public interest that the right hon. Gentleman should now recant. I do not want another generalised statement; I want him to tell us why he launched the test and to give an absolute commitment that he will now abandon it, and will shred and scrap any document that does not give a fair range of options to the public. I want him to say that he will ensure that in future the one guiding principle will be


that people should be informed of their rights and the decision on what to do should be theirs alone. We want not generalised commitment but specific action to undo the damage and to lay the fears to rest. I commend the motion to the House.

The Secretary of State for Social Security (Mr. Peter Lilley): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
endorses Her Majesty's Government's clear commitment to freedom of choice in the means by which social security benefits are paid, while reducing fraud and unnecessary costs by extending the availability of Automated Credit Transfer to all benefits and encouraging people with bank accounts to choose to have benefits paid into their accounts, to the continuation of a national network of post offices and sub-post offices and to securing the efficient and effective delivery of the vital service which the Post Office provides.".
Before responding to the extraordinary speech by the hon. Member for Glasgow, Garscadden (Mr. Dewar), may I refer briefly to the two-hour paving debate on the same subject that, rather unusually, preceded the debate last Thursday? That debate was exceptional both in length and in quality. Every contribution was more balanced, less partisan, and better than the one that we have heard from the hon. Member for Garscadden.
Every hon. Member who spoke on Thursday expressed concern about the future of sub-post offices. Of course, I shall respond to that concern. But every hon. Member tried to avoid making party political points, and every hon. Member from every party tried to avoid scaremongering, unlike the hon. Member for Garscadden, whose whole approach is based on scaring the poor, the sick and the needy. Indeed, since he has been shadow social security spokesman his principal stock-in-trade has been scaremongering.
Last autumn, full of foreboding, he warned the media that I would be unable to fulfil our pledge to uprate pensions. He was wrong. Before the Budget he said that the Chancellor would introduce taxation on invalidity benefit then and there. He was wrong. Now he forecasts that we are about to close rural post offices. I have news for the hon. Gentleman, which will be no surprise to my hon. Friends. He is wrong again. I challenge him to name one scare story that he has told about my Department since he has had that job, which has come true. [Interruption.]— The hon. Gentleman's silence condemns him.

Mr. Barry Jones: rose—

Mr. D. N. Campbell-Savours: rose—

Mr. Dewar: rose—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. It might be advantageous for the debate if the House were to settle down, quieten down, and listen to the debate.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Mr. Secretary Lilley.

Mr. Lilley: It may be helpful if I set out the order in which I shall deal with the issues before us. First, I shall spell out the Government's commitment to sub-post

offices and to choice. Secondly, I shall explain why we are encouraging payment into bank accounts and building societies.

Mr. Peter Hain: rose—

Mr. Lilley: In a moment.
Thirdly, I shall explain how we are encouraging automated credit transfer, and I shall deal in particular with the trial forms.
I shall largely leave the issue of privatisation to my hon. Friend the Parliamentary Under-Secretary of State for Technology—or rather, the postmaster-general, as I imagine he is now called—who hopes to catch your eye at the end of the debate, Mr. Deputy Speaker.

Mr. George Foulkes: The Secretary of State has explained how he intends to deal with the questions raised, but when will he deal with the question raised by the hon. Member for Caernarfon (Mr. Wigley), which applies, for example, to the post office in Dalmellington in my constituency, which is just surviving at the moment? If the Secretary of State is successful and persuades just a small number of people to take ACT, that post office will close and all the people in Dalmellington will have no choice at all. Will he answer that key question now before he gets on to the other points?

Mr. Lilley: I will answer that question in the second part of my remarks. This is the pledge that we made in our manifesto—[Interruption.]

Mr. Deputy Speaker: Order. I have already appealed for the Secretary of State to be given a fair hearing. [Interruption.]Order. I intend that that should be the case.

Mr. Lilley: The pledge in our manifesto said:
We are committed to maintaining … a nation-wide network of post offices.
The words are unambiguous—

Several hon. Members: rose—

Mr. Deputy Speaker: Order. The Secretary of State has made it clear that he is not giving way.

Mr. Lilley: Our commitment is unequivocal, and I can reaffirm it emphatically today.

Mr. David Winnick: On a point of order, Mr. Deputy Speaker. Before you came to the Chair, my right hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) gave way virtually every two minutes—

Mr. Deputy Speaker: Order. The hon. Gentleman knows full well that that is not a point of order for the Chair.

Mr. Lilley: No other party made such a pledge—indeed, neither the Labour party nor the Liberal party even mentioned sub-post offices in their manifestos, but now they are happy to hijack any campaign that comes along.

Mr. Kevin Hughes: I am grateful to the Secretary of State for giving way, especially on his party's manifesto. While he is reading that part out, will he read out the commitments on tax and particularly on VAT?

Mr. Lilley: There was no such pledge. [Laughter.] We made our pledge because we recognised the focal role that sub-post offices play in many communities, especially in rural areas. That role was spelt out eloquently by my hon. Friend the Member for Rochford (Dr. Clark) last Thursday and by many other right hon. and hon. Friends.

Mr. David Alton: Does the Secretary of State accept that the problem affects not only rural communities but urban areas? Many people are concerned because they see choice being razed. The post offices will suffer a decline in their trade and go out of business if ACT is introduced. That is the core of the question and that is the fear that the right hon. Gentleman's pilot scheme has raised. Is it not worth saying that, although it may have been a useful exercise, the whole idea should now be abandoned?

Mr. Lilley: I entirely accept that sub-post offices in urban areas are also valuable and play an important role. I shall come on to that. I recognise the fears that have been aroused by the leaflet from the Sub Postmasters' Federation and I shall deal with that systematically if I am allowed to by the mob on the Opposition Benches.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. I intend that we should have an orderly debate. It is for the Secretary of State to decide whether to give way and if he decides not to, hon. Members should resume their seats.

Mr. Lilley: I have spelt out our manifesto commitment. However, the maintenance of a network of post offices is not only a manifesto commitment; it is also in the direct self-interest of my Department. We need the post office network to deliver our benefits, especially—but not only —in rural areas. We will continue to need it for the foreseeable future.

Mr. Thomas Graham: Will the right hon. Gentleman give way?

Mr. Lilley: The hon. Gentleman may find that what I am saying will satisfy his constituents, if not himself.

Mr. Campbell-Savours: Will the Secretary of State give way?

Mr. Lilley: If the hon. Gentleman will allow me to complete my point, I will happily give way to him if he still has a query.
However successful we are in encouraging people to choose payment into bank accounts, there will still be many who prefer the present system, including millions who have no suitable account. Indeed, as the hon. Member for Western Isles (Mr. Macdonald) said—I congratulate him on securing the debate the other night—if sub-post offices did not exist, we would need to invent them.
At the end of the day, that means that we must pay to help keep in being a viable network of sub-post offices and to make it profitable for postmasters and postmistresses to remain in business and deliver our benefits. We have always accepted that.

Mr. Campbell-Savours: The Secretary of State will know that the Minister for the Environment and Countryside, who is sitting beside him, and I share most of the Lake district where there are many small hamlets, many of which have post offices. Will the Secretary of State

give the Minister sitting beside him and me an assurance that the further introduction and promotion of ACT' will not in any way prejudice the future of those small post offices in the Minister's constituency and in my constituency? May I have a clear assurance on that now from the Dispatch Box?

Mr. Lilley: I have already given our assurance and I have reaffirmed our pledge to maintain a national network of sub-post offices and I am now explaining the mechanism by which that is achieved.

Mr. Graham: Will the Secretary of State give way?

Mr. Lilley: Perhaps the hon. Gentleman would allow me to explain that mechanism at greater length.
We have always accepted that we must make it profitable for postmasters to deliver our benefits. We do that via our contract with Post Office Counters Ltd and the terms are adjusted to reflect changing volumes of transactions, the switch from order books to ACT and all the other factors that affect viability.
As it so happens, the contract between the Benefits Agency and Post Office Counters Ltd. is currently being renegotiated. It is perhaps no coincidence that bloodcurdling warnings about the collapse of the branch network are circulating at this time. It is often the way when a contract is being negotiated that rather extreme statements are made.
I do not want to pursue the negotiations in public. Suffice it to say that I am confident that we will agree a sensible contract which reflects the common interest of both Post Office Counters Ltd. and the Benefits Agency in maintaining a viable network.

Mr. Dewar: I want to be clear about what the Secretary of State is saying. I took the implication of those remarks to be that he thinks that the present campaign has been deliberately promoted, as a means of putting pressure on his Department, by the Post Office in its negotiations and that it is therefore dishonest and totally self-interested. Is that the Secretary of State's position?

Mr. Lilley: I merely mentioned the common coincidence between blood-curdling warnings and negotiations.
Hon. Members have from us a triple assurance that we will maintain a viable network of post offices: we are pledged to do so, we need that network to deliver our benefits and we are prepared to pay to help sustain that network through our contract with the Post Office.

Mr. Calum Macdonald: The nub of the issue is choice. For choice to be real, Department of Social Security customers must have free and equal information about all the options available to them. Will the Secretary of State accept that as a fundamental principle which he will implement? Does he also accept that the forms that were sent out fell way short of that principle?

Mr. Lilley: As I have said, I will come to the issue of the forms in due course and deal frankly with the hon. Gentleman's point.
On top of the assurances that we have given, we believe in encouraging sub-post offices to diversify into new businesses. My hon. Friend the Member for Ribble Valley (Mr. Evans) was right to emphasise that point in the debate the other night. The Government have already made it clear that they are more than willing for post


offices to be a selling point for the national lottery, should the successful contractor choose to sell tickets in that way. The possibility of allowing Post Office Counters Ltd. wider powers to take on new products and offer other services is being actively considered as part of the Post Office review.

Mr. Alex Salmond: Will the Secretary of State remind the House of the exact nature of the assurance that he has just given? Is he assuring the House that no small post office or sub-post office will close as a result of a lack of business or loss of business caused by his campaign to switch to ACT? Is he going to arrange the contract with post offices in such a way that no small post office will close as a result of his campaign? Yes or no?

Mr. Lilley: No Minister and no Government can guarantee that every post office will remain in operation. As the hon. Gentleman knows, each year 700 postmasters and postmistresses resign. Some are replaced, and sometimes the location is moved. But I have given an assurance that we will maintain the viability of the national network and will do that through our contract. We have shown our commitment to do so.

Several hon. Members: rose—

Mr. Lilley: Perhaps hon. Members will allow me to make a little more progress.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. About six hon. Members on each side of the Chamber are attempting to intervene. The Secretary of State has indicated that he will not give way, so will hon. Members please remain in their seats?

Mr. Lilley: At the same time as supporting the post office network, we have always believed in choice. We reaffirmed that in the citizens charter, and I reaffirm it now.

Mr. Mark Robinson: Has not my right hon. Friend given the many pensioners in my constituency precisely the assurance that they need—that their sub-post office will remain open?

Mr. Lilley: Absolutely. I believe that pensioners will respond with satisfaction to the points that we have made and that they will despise Opposition Members who continue to try to keep a scare going even when the very assurances which they seek have been given.
At the same time as supporting the post office network, we have always believed in choice. We have reaffirmed that in the citizens charter and I reaffirm it now. By contrast, the Labour party has never been the party of choice in this or any other matter. It opposed giving people the option of ACT, and the hon. Member for Glasgow, Garscadden (Mr. Dewar) today failed to welcome our plans to extend that option to all benefits.

Dr. Robert Spink: Before my right hon. Friend talks about new products, will he confirm that giro accounts are available for post office customers to collect their benefits and pensions from both Crown post offices and sub-post offices?

Mr. Lilley: That is absolutely right. It is one way that we could all have the best of both worlds—a cheaper, more

effective means of delivery which none the less helps to sustain the sub-post office network, brings people into shops, and brings business with it. Although I am not allowed to advertise any private system of distribution, I hope that people in the privacy of the Chamber have heard my point and will transmit it onwards.

Mr. Geoffrey Dickens: Will my right hon. Friend give way?

Mr. Lilley: May I make a little progress and then give way to my hon. Friend?
Let me refer to why we are encouraging people to choose automated credit transfer on a voluntary basis.

Mr. Macdonald: Will the right hon. Gentleman give way?

Mr. Lilley: I have already given way once to the hon. Gentleman.
Colleagues will recall that I announced that we would be continuing to encourage more use of ACT at the end of a very difficult public expenditure survey round. Prior to my uprating statement, there had been widespread fears, fanned by scaremongering from the hon. Member for Garscadden, that I would be unable to keep our pledges to pensioners and families, that I would be unable to uprate benefits for the least well-off, and that I would have to curtail help to victims of the recession. He simply did not understand my priorities. My objective throughout was to maintain existing benefits and secure resources to fulfil modest but very important pledges such as that to introduce our new independent living fund, which has been going through the House of Lords this week.
In my Department, money goes on benefits, on fraud or on operating costs. So savings had to come from fraud and operating costs. I was able to promise my right hon. Friend the Chief Secretary and colleagues on the expenditure committee some substantial reductions and savings as a result of reduction in fraud elsewhere, but it could not escape their notice that the biggest single item in my operating costs is the cost of delivering benefits—£650 million a year. Of that, over £100 million is accounted for by order books and giro cheques which are stolen and fraudulently encashed.
Moreover, the cost of paying out of order books is 14 times as great as the cost of payment by ACT. Each payment by order book costs 44p; the same payment into a bank account costs just 3p. In those circumstances, we were bound to continue encouraging people to choose payment into their bank accounts.
If I had passed up the prospect of even modest savings here, could I realistically have asked for more resources for the independent living fund or the social fund, let alone the massive resources that we secured to uprate all benefits? That is why I told the House last November:
I … propose to encourage more customers to accept payment of benefits directly into their bank or building society accounts."—[Official Report, 12 November 1992; Vol. 213, c. 1015.]
The hon. Member for Garscadden raised no objection then—but of course no scare campaign was being run at the time.
The option to receive payment into bank accounts was introduced for certain payments in 1982. Since then, the proportion of people receiving payment has built up gradually to around 15 per cent. The main source of growth is new claimants, especially new pensioners.

Mr. Dickens: Will my right hon. Friend clarify an issue on which, with respect, I believe we will come unstuck if he does not explain it more clearly? He was asked whether any sub-post office was likely to close. He could not give an assurance about that, because he did not know about bad management, people falling ill or changing their jobs and so on; but he did imply—I think this ought to be clarified—that no sub-post office would close as a result of ACT, meaning that this would be reflected in new contracts. Is that right or wrong?

Mr. Lilley: That is, of course, our intention. All small post offices are currently paid a fixed sum regardless of volume, so people switching to ACT will make no difference to the amount of remuneration that they receive.
People are increasingly accustomed to receiving payment into their bank accounts: 70 per cent. of claimants have bank accounts, and many find payment into their accounts more convenient and safer. It enables them to carry less cash and possibly to earn a bit of interest. Some 35 per cent. of new claimants who have the option of ACT choose it. As new claimants gradually replace existing claimants, the proportion using ACT increases by a little over 1 per cent. a year.

Mr. Michael Shersby: Will my right hon. Friend give way?

Mr. Lilley: I will give way to my hon. Friend, but then I must make considerable progress before giving way again.

Mr. Shersby: Is my right hon. Friend aware that last week the Public Accounts Committee criticised the substantial fraud arising from organised criminal activity that has resulted in the substantial losses to which he referred? Would it be possible for ACT payments to be paid into post office savings accounts, which cost the holders nothing but would still enable them to draw their pensions at the post office?

Mr. Lilley: My hon. Friend makes two good points. First, the Public Accounts Committee has looked at the matter. In 1985, the all-party public accounts committee urged the DSS to encourage people to take their payments of benefits in their accounts, rather than use order books. People can have payments made into their Giro accounts in the Post Office through electronic banking systems. The National Savings bank does not provide that facility. If it did, we would be happy to make use of it.

Mr. Dewar: rose—

Mr. Lilley: I said that I would make some progress. The hon. Gentleman has intervened once and has spoken for half an hour. If he forgot to make the points that he intended at the time, that is his fault. If he listens, he might learn.
When the option for ACT was introduced, dire warnings were sounded. They have proved unfounded. It may give some comfort to the hon. Member far the Western Isles (Mr. Macdonald), who did not pursue an alarmist tack, to recall how alarmist his predecessor's fears turned out to be. In 1980, when the proposals for ACT were made to the House, the then hon. Member for Western Isles, Donald Stewart, predicted:
The Government's proposals would inevitably close down rural post offices.
They would be "disastrous" and

another nail in the coffin of the rural areas".—[Official Report, 19 February 1980; Vol. 979, c. 294–297.]
Yet since then, the system has not collapsed.
Although the proportion of people using ACT has been steadily rising, this has not led to a decline in the volume or value of DSS business handled by post offices. On the contrary, the number of DSS payments made through post offices has risen in each of the past three years.
All retailers have faced a tough time during the recession, and sub-post offices are no exception. But the number of closures over the past five years has been less than it was between 1974 and 1979—to pick a period at random.

Mr. Dewar: I do not wish to raise a point that I forgot to make in my speech—I simply want to understand what the Secretary of State has just told the House, because it is of some interest. He seemed to say that, if local sub-post offices lost business because customers shifted to ACT, the system was so constructed that they would not lose any revenue from the DSS. Is that the position?

Mr. Lilley: Small post offices—from memory, there are 2,700— receive a fixed payment, regardless of the number of transactions made through them.

Mr. Dewar: rose—

Mr. Lilley: If the hon. Gentleman cannot understand that, he should resume his seat. I answered the question perfectly clearly and everybody understood the answer.
It is a mistake to suppose that the savings that are made when people switch from order books to ACT arise primarily as a result of the reduced payments to sub-post offices. Sub-post offices are generally lean, efficient family-run businesses. Payments to sub-post offices account for only one quarter of the extra costs. A large part of the extra costs of order books arise within the Benefits Agency itself. Preparing, printing and distributing order books and girocheques costs £200 million. By contract, ACT simply involves our computer transmitting information to the bank's computer at the press of a button.
Fraud and theft are also a significant cost factor—£100 million a year—as well as the contribution that we make to post office counters, overheads, warehousing costs, Crown offices and other overheads. In principle, therefore, we can encourage a shift to ACT, agree to sustain sub-post office incomes despite the reduction in volume and still make substantial savings for the taxpayer.
The major step that we are taking to encourage the use of ACT is simply extending that option to most benefits where it is not yet available. At present, the main benefits for which it is available are pensions and child benefit and disability allowances. This month, we are starting to phase in availability of ACT for unemployment, income support for the unemployed, sickness and invalidity benefit and severe disability allowance. Many people are asking for ACT to be extended. Disabled people in particular often find that it is a convenient way to receive all their benefits. Would Labour Members wish to deny people that?
As many hon. Members have said, we are preparing to redesign the claim forms.

Mr. Graham: rose—

Mr. Nigel Griffiths: rose—

Mr. Deputy Speaker: Order. It is obvious that the Minister is not giving way.

Mr. Graham: On a point of order, Mr. Deputy Speaker. How can Labour Back Bench Members quiz the Secretary of State when he will not allow us to intervene?

Mr. Deputy Speaker: The hon. Gentleman knows full well that it is a matter for the Minister to decide whether to give way.

Mr. Lilley: I have given way to a great number of hon. Members—rather more than did the Opposition spokesman. There is a demand from my colleagues that we make progress.
As colleagues will know, the Benefits Agency ran trials of three variants of a pension claim form that was sent to those approaching pension age. The trials ran for the first 10 days of March. Let me make four things clear. These were trials. As such, their purpose was to enable the Benefits Agency to design a new form in the light of the response to all three specimens. All the forms were clearly headed,
How you want to be paid?—You can choose".
The new form will mention the Post Office option. In this respect, the new Benefits Agency forms will contrast sharply with the leaflets given to potential claimants by many post offices, which make no mention of any alternative to payment by order books. Indeed, the post office leaflets assert that there is no alternative way of receiving benefits in cash. The child benefit leaflet given to expectant mothers says:
The only place where you can collect it in cash is your local post office".
Everyone knows that one can get cash from a bank. Perhaps the Sub Postmasters Federation—and, indeed, the hon. Member for Garscadden—should cast a critical eye at these leaflets, which have been distributed by thousands of post offices to thousands of benefit claimants over many months, before getting too concerned about 8,000 copies of a trial leaflet issued over 10 days.
As well as revising our forms, we are also looking at ways of making order books more fraud proof. A new type of order book will be introduced this summer which, through improved design and some new technical features, will, I hope, stop some of the cheats in their tracks.
The clear assurances that I have given to postmasters and pensioners could not be more robust. They are in line with our long-standing policy and reflect our sound Conservative principles. I have shown that the shameless scaremongering over the past few weeks has been without foundation. It is monstrous to exploit the vulnerability of sick, needy and elderly people by whipping up groundless fears. It is time for the mischief to stop. The federation should withdraw its misleading leaflet forthwith and the Labour party should withdraw its scaremongering motion at once.

Mr. Martin Redmond: The debate is not about choice. The rent-a-mob that we heard earlier made it plain where they stood. The same rent-a-mob shouted down Opposition Members on the privatisation of water, the poll tax, education and law and order. Everything that Labour Members said, the rent-a-mob condemned. The debate is not about choices; it is about money. The Secretary of State could be accused of being economical

with the truth. It was clear from his speech that the proposals are not about choice, but about money that his Department hopes to save and then squander.
It is not about choice, but about the Secretary of State getting his sticky fingers caught in the till. If he wants to do something to give people choice, why does he not give choice to people in receipt of benefits who want the benefits to be dealt with at source, so that some of them can go to housing departments as payment for rent and council tax?

Ms Kate Hoey: We all agree that choice is paramount in this matter. Does my hon. Friend agree that there can be real choice only if information is available? If the information about bank charges and the possibility that there will be fewer banks and post offices throughout the country is not made available to people, ACT offers no real choice.

Mr. Redmond: My hon. Friend makes a valid point. Perhaps she should spend an hour or two explaining her views in a little more detail to the Secretary of State. I am not sure whether she would make any impression.
The stubborn and greedy way in which the Government have behaved since 1979 has meant that people do not trust what they say and, because of that, they are rightly sceptical about what is proposed. It is not about choice, but about money.
I come from a mixed urban and rural constituency in which the village post office plays an important role. I have received hundreds of letters about the proposals to stop payments at post offices. The Secretary of State may shake his head all he likes, but he has not convinced the Opposition about his intentions. I am sure that my hon. Friends the Members for Doncaster, Central (Sir H. Walker) and for Doncaster, North (Mr. Hughes) have also received many hundreds of letters.
If the Secretary of State wants to keep village post offices open and viable, he should withdraw the proposals. The village post office is a vital part of the community. The Secretary of State is not giving people choice. Public transport has been taken away from the people of rural villages, so if the post office closes the local people will not be able to hop on a bus into Doncaster. They will suffer as a consequence. The Government should give people the choice of using public transport, if the post offices are to close. It is clear that the proposal is not about choice, but about money.
The message from the people who live in my patch to the Secretary of State is that he should get his sticky fingers out of the post offices and let people continue to draw their benefits. OAPs are the most vulnerable people in our society. The Opposition are not scaremongering. The Government want to close village post offices and they are not giving people the right information.
In view of Madam Speaker's request, I will close on that point. I hope that the Secretry of State will take note of the many hundreds of letters sent from my constituency and others across the country.

Mr. Derek Conway: I usually listen to the speeches of the hon. Member for Glasgow, Garscadden (Mr. Dewar) with great care and interest. I believe him to be an intelligent man who makes interesting speeches. However, he has done his reputation


no good by the way in which he moved this motion. He was not prepared to address many of the sensible points made by my hon. Friends in their interventions.
If people who live in rural areas such as Shrewsbury and Atcham, where there are 120 villages and a county town, and who care for and use their sub-post offices had listened to the hon. Gentleman's speech, they might have been inclined to think that he was genuine in his concern for the future of sub-post offices. They would no doubt contrast that with the fact that, when in government, the Labour party closed more sub-post offices than can be imagined. The Labour party was so concerned about sub-post offices that they were not mentioned once in the party's election manifesto. The tears shed by the Opposition this afternoon were plainly crocodile tears.

Mr. Hain: Is the hon. Gentleman aware that the sub-post office in Great Stukeley closed recently? If the Prime Minister cannot even keep his local post office open, what prospect is there for the other 10,000 rural post offices that the Government are threatening?

Mr. Conway: I am staggered that the hon. Gentleman should even think that the Prime Minister would act in a gerrymandering way in his constituency. That may be the practice of the Labour party when in government in awarding contracts, but it is not the way in which Conservative Prime Ministers behave.
The debate has been termed a "scaremongering" one. My right hon. Friend the Secretary of State made an effective speech this afternoon, despite a clearly well-organised barracking tactic on the Opposition Benches. It did not put him off because he has a strong case to put to the House. That is why so many Opposition Members tried to stop him delivering it.
We accept that politics and life in this Chamber are not for the squeamish. None of us should be in this place unless we are prepared to take a bit of knockabout. My right hon. Friend the Secretary of State can more than cope with it. However, the scaremongering among pensioners displeases me immensely and is to the shame of those involved in politics.

Mr. Michael Connarty: Our case has been given a great deal of force by the National Federation of Sub-Postmasters, which is not known to be a natural ally of the working class and the Labour party. Does the hon. Gentleman realise that he is insulting sub-postmasters? Is he saying that their anxieties are not genuine and that they are merely scaremongering? I do not understand how the hon. Gentleman can draw that conclusion.

Mr. Conway: I can explain to the hon. Gentleman exactly what happened. There are two reasons why the campaign came about. First, as my right hon. Friend said, the contract has been renegotiated. People rightly put pressure on the Government when they are negotiating a contract. All is fair in that. Secondly, in the recent county council election campaign, some sub-postmasters, including those in my constituency, were conned into believing that politicians interested in their own future were expressing a genuine interest rather than seeking to use sub-postmasters as part of a party political campaign.
Yesterday I had a word with the hon. Member for Gordon (Mr. Bruce), who is an honourable and decent man. He promised yesterday something which I know that he will deliver.

Mr. Malcolm Bruce: It is on the Board.

Mr. Conway: I am assured that it is on the Board. I am grateful for that. It is a petition of 3,000 names gathered at sub-post office counters in the Rea valley in my constituency. I have spoken to the sub-postmasters involved. They had no idea that they were being used as part of a Liberal campaigning tactic. They thought that the petition was a genuine expression of interest in their concern.
When it was pointed out that the petitions were being distributed in the middle of a county council election campaign and that they should perhaps encourage people to write to their Member of Parliament rather than be conned by the Liberal party, the sub-postmasters said that they would have nothing to do with the petition. They stopped putting the petition on their counters. They are honourable and decent men trying to make a sensible living. They do not want to be used by political parties in a scaremongering campaign to garner a few cheap votes out of frightened pensioners during the county council elections.

Mr. Ian Davidson: Will the hon. Gentleman give way?

Mr. Conway: No. I wish to make progress because many hon. Members wish to speak.
Was the campaign genuine? Having looked at the leaflet, I thought that it could have been clearer. My right hon. Friend the Secretary of State explained to the House the point of the 8,000 trial leaflets. They were issued over a period of 10 days. The trial did not go on for months. It was precisely that—a trial to find out how the public responded. My right hon. Friend has had a clear response.

Mr. Dewar: rose—

Mr. Conway: I give way to the hon. Member for Garscadden, although he was not prepared to give way to me on the several occasions when I tried to intervene in his speech.

Mr. Dewar: I gave way rather generously to a wide variety of life on the Conservative Benches. Will the hon. Gentleman consider one point? We had a great deal of argument of mixed value from the Secretary of State, but we did not receive an assurance that if and when a redesigned form is produced, it will refer specifically in the part dealing with choice to all the options available. Does he join me in hoping that we shall receive such an assurance and that we shall rule out the possibility that the choice of the post office will not be specifically referred to on the form? He seemed to hint that that would be unsatisfactory.

Mr. Conway: I cannot speak for my right hon. Friend, but my understanding is that, when the new forms are sent out, the public will be left in no doubt that choice is to continue. We shall see in tomorrow's Official Report whether that is the case. On the question of choice, there has never been any doubt in the minds of the Government or of other Conservative Members. The campaign that was


mounted by Labour and Liberal candidates in the local elections was intended to frighten pensioners by making them believe that they would cease to have a choice.

Mr. Davidson: Will the hon. Gentleman give way?

Mr. Conway: If all the interventions are not to be counted against my time, I shall happily give way. In this regard, I seek the protection of the Chair.

Mr. Davidson: There have been no recent local government elections in Scotland, yet in that part of the world there has been a sustained campaign against the Government's proposals for sub-post offices. The thrust of the campaign was not concerned solely with the local elections. The hon. Gentleman does great injustice to the many people who have signed petitions and written letters if he assumes that they are allowing themselves to be used by the Labour party or by the Liberals.

Mr. Conway: The hon. Gentleman has misconstrued my remarks. The hundreds of pensioners who have written to me are not party political dupes. I am talking about people who have sent letters in their own hand, not about people who have been prompted by a campaign involving photocopies and pro formas, which count for nothing among hon. Members. People have been falsely scared into thinking that the Government intend to take action which, in fact, has never been in their minds.
It has been made clear by my right hon. Friend, as it has been made clear in interviews and press releases, that the Government never intended to remove the option to use post offices, rather then banks and building societies, for the purpose of obtaining cash. As so many rural constituencies are represented by Conservative Members, no Conservative Government would be daft enough to take such action.
Indeed, the scaremongering campaign will blow up in the faces of the Labour and Liberal parties. As we found in the "Jennifer's ear" incident during the general election campaign, one can run a scare campaign but one must ensure that there is an element of truth in it. This debate will make it clear to the people who have written to me and to those who follow the proceedings of the House that there is not a kernel of truth in the scare campaigns that the Labour and Liberal parties have been running. The general public will turn on the members of those parties for that abuse.
My right hon. Friend gave the House three pledges today. He said that the Conservative Government are pledged to maintain sub-post offices. That pledge was given in our manifesto, but it was not mentioned by the Labour party or in the speech of its principal spokesman today. My right hon. Friend's second pledge concerned the need to maintain sub-post offices. The Government accept that it is necessary to continue services that are provided so efficiently. My right hon. Friend's third pledge was that the Government would continue to pay for retention and that they would ensure that the block payment was provided regardless of the volume of credit transfers.
It is most important to ensure that choice is maintained. This is a matter of which the Government have at no stage in their consideration lost sight. The Opposition spokesman's opening speech today will have served my right hon. Friend and other Conservative Members very

well. We should be able to demonstrate to our constituents that they have been conned by the Opposition. When people are made aware of the facts, what the Opposition parties are doing will backfire on them, as they deserve.

Mr. David Rendel: Thank you, Mr. Deputy Speaker, for giving me this early opportunity to do what the Prime Minister would no doubt describe as "breaking my duck".
As is traditional, I should like to begin by recalling the sad circumstances of my election to the House. In February of this year, my predecessor, Judith Chaplin, tragically and very suddenly died after what had appeared to be a routine and successful minor operation. Her death was a great loss not only to the House, and particularly to her many close friends here, but also to all of us in west Berkshire. I do not think that anyone doubted that she was a woman of immense ability. Indeed, she was believed on all sides to be destined for high office. For her parliamentary career to be cut short after only 10 months was indeed a tragedy.
Sadly, just one week after he had given the oration at Judith's memorial service, her predecessor, Sir Michael McNair-Wilson, also died. He too will be long remembered with great affection by many in this House, as well as by all of us who knew him in west Berkshire. He had many friends and, so far as I know, not a single enemy, even among those who, like myself, were his political opponents. But, above all, we shall remember him for his immense courage after his health failed him. He not only remained a Member of the House while on kidney dialysis, but fought and won in a further general election. It is a great sadness that he enjoyed less than a year of retirement before he too died.
Both my predecessors were admired greatly as first-class, hard-working constituency MPs. As I said in my acceptance speech, they will be a very hard double act to follow. The constituency that they have passed on to me covers almost half of the area of Berkshire. Although it is dominated by the two largest towns—Newbury and Thatcham—nearly half the population live in the town of Hungerford, in the larger villages such as Lambourn, Compton, Mortimer and Burghfield Common, or in the smaller villages and outlying settlements spread across the rural area. With the M4 cutting across the constituency from west to east, we lie in the now somewhat tarnished silicon valley, with high-tech industries providing a large share of local employment. We are also, of course, famous for our racing stables, particularly in Lambourn and West Ilsley.
Many hon. Members will, for one reason or another, have had cause to visit our beautiful constituency during the past few weeks. Indeed, there was a time when we saw so much of the hon. Member for Winchester (Mr. Malone) that I began to wonder whether he was looking for a home in the area. It is, of course, no surprise to me that people should wish to visit west Berkshire, a very large proportion of which is designated as an area of outstanding natural beauty, but I suppose that it is only fair to say that, of the two principal tourists who visited us from Somerset recently, one—the right hon. Member for Yeovil (Mr. Ashdown), who often sits in the seat that I have temporarily occupied today—got a rather better reception than the other.
It is because so large a proportion of our population live in the rural area that I particularly wished to speak in this debate. Over the past few weeks, hon. Members on both sides of the House have found their mail bags full —as I have done—of letters pleading for the retention of rural sub-post offices. Indeed, if the Secretary of State has done anything for post offices recently, it is perhaps that many extra stamps have been sold to pensioners who have written to their Members of Parliament on this subject.
But it is not just a matter of letters. As I went round my constituency during the recent by-election, I was struck by how often this issue was raised on the doorstep. As we all know, rural sub-post offices are often housed in the village shop, and thousands upon thousands of our village shops are dependent on their post office income for survival.
Let me illustrate briefly how important these village shops are for life in rural areas by telling the House about what one village postmistress said to me only a week or two ago. She told me about the lady who comes into her shop almost every day, takes just one or two items off the shelves, and then waits to pay. After a while, the attendant at the till motions to the lady, to indicate that it is her turn to pay, but, in reply, the lady stands back and motions others to go ahead of her.
At first the postmistress could not understand why the lady should act in this way, but eventually it dawned on her that the lady comes into the shop not merely to buy her daily rations but also because the shop is her sole meeting point for contact with her fellow human beings. She lives on her own—a lonely existence, without relatives around her—and her contact with humanity consists of her daily visit to her village shop-cum-post office, where she always waits at the end, of the queue, listening to the village gossip.
For all too many people, the village shop is now the only escape from their well of loneliness. If we lose such shops, we shall lose a vital ingredient of the quality of life in rural areas.
Let there be no doubt that the sub-post office system is vital to the survival of village shops. I have long since lost count of the number of letters that I have received, mainly from elderly people, but also from those in receipt of various other benefits as well. They have all stated that their local post office is now the only remaining place in the village where they can obtain cash. The banks have mostly long since closed their village branches.
If the post offices close as well, the only option will be a trip into town. It may sound easy, but it is not when people have to rely on public transport because they are too old or too disabled to have a car of their own. Public transport has more or less disappeared from most rural villages. Even when a bus is available, many people have written of how a trip into town to draw their pension will cost them more in bus fares than the total increase in their pensions this year.
Of course I understand that the Secretary of State intends to leave it to the individual to choose between payment through a bank and payment through a post office, but that is not the choice that people want—a real choice for them means choosing between paying through a bank in the town or paying through the post office in their local village. That choice is under threat today.
I understand that the Secretary of State wishes to reduce the taxpayers' subsidy to rural post offices, but surely hon. Members should take a wider view. Yes, we can save the taxpayer money by reducing the subsidy to rural post offices, but what about the far greater cost to the

taxpayer of the extra traffic on the roads as more and more people have to drive their cars into towns? What about the cost of car parks, petrol and environmental pollution?
The overall cost to the community caused by the loss of the sub-post office system will be far greater than any possible savings. Let all hon. Members join to save village sub-post offices, not by merely giving a vague pledge—such as the Secretary of State gave about some national network—but by giving a specific pledge that the number of sub-post offices will not be further reduced. A small, but important, aspect of our country is in danger. It is our duty to save it before it is gone for ever. I therefore urge hon. Members to vote for the motion, not for the Government's amendment.

Mr. Michael Brown: It is a great pleasure for me to follow the hon. Member for Newbury (Mr. Rendel). He was generous in his warm tribute to the late Judith Chaplin and Sir Michael McNair-Wilson. If he is half as good a Member as they were, as I am sure he will be, he will be a worthy successor to them. On behalf of my hon. Friends, I thank him for his kind words in memory of our two colleagues.
It is hard to believe that the hon. Member for Newbury has been here but two weeks, as he spoke with the fluency of an experienced Member of Parliament. His description of Newbury, to which I have yet to make a visit, makes it sound almost as beautiful as Brigg and Cleethorpes. I should advise the hon. Gentleman that I had the dubious privilege of visiting Eastbourne three years ago, but following that visit, Ministers thought it wise for me to stay well away from Newbury—although it did not seem to make any difference.
I do not know for how long the hon. Gentleman will be a Member of the House. It may be three years, perhaps it will be four—who knows? If there has to be a Liberal Member for Newbury, there is no doubt that the hon. Gentleman, with his local knowledge and experience as a councillor, will ensure that the constituency could not be better served. I wish him a happy and enjoyable time as a Member of Parliament.
The hon. Gentleman rightly drew attention to the issue of sub-post offices in his constituency. I understand and empathise with many of his comments, as my constituency of Brigg and Cleethorpes has a large number of sub-post offices, both in the town of Cleethorpes and in rural areas. However, my right hon. Friend the Secretary of State this afternoon gave the reassurance that the hon. Gentleman's constituents were seeking when he campaigned during the by-election.
The robust speech this afternoon of my right hon. Friend the Secretary of State has laid the ghost. The Labour party raised the fears for party political purposes, as did the National Federation of Sub-Postmasters to some extent. I understand—as my hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway) said —that negotiations are taking place between sub-postmasters and the Government. It is inevitable—I make no particular complaint about it—that exaggeration sometimes occurs in such negotiations, and there has been some exaggeration in the current negotiations. We must bear in mind the fact that the first duty of my right hon. Friend the Secretary of State for Social Security when


dispersing the huge Government budget over which he presides is to ensure that that budget is distributed directly to the claimants.
I am concerned to learn that the total cost of transferring from the taxpayer to my mother and father —who are both old-age pensioners—and all the other pensioners and claimants on various benefits paid by the Department, is £475 million a year. I believe that every penny that my right hon. Friend the Secretary of State raises should go to the claimants for whom it is intended.
We can have a separate debate in the House under the umbrella of the Department of Trade and Industry on whether the Government and Parliament, for reasons of social and rural policy, want to assist in ensuring that the structure of the sub-post office service is maintained. That is a matter on which Parliament, the House of Commons and the Government can rightly hold a view.
In the Budget debate earlier this year, I called for cuts in public expenditure—or if not cuts, for the necessary funds to meet that public expenditure. I want all the money —or as near as possible all the money—in the massive budget over which my right hon. Friend the Secretary of State presides, to go to my mother and father and all the other claimants. I am worried when I see that £475 million of the money available for distribution to pensioners has to be spent on transferring the funds from the Government to the claimant.
I made a calculation earlier today—

Mr. Connarty: Will the hon. Gentleman give way?

Mr. Brown: No, I shall make my point and then give way.
My mother and father are 65 and 67 respectively, and are both pensioners. They both receive their pensions directly into their bank accounts, in arrears, every 13 weeks. That means that there are eight transactions per year for my mother and father—four for my father and four for my mother. To make the transfer payments from the state for my parents' old age pensions costs the state 24p for all the transactions.
My mother and father could, instead, each walk the two and a half miles from the village of Crossbush in West Sussex where they live to the town of Arundel. Everyone says that sub-post offices are right on the doorstep of every claimant. That is largely true, but a great number of people have to walk a long way to their local post offices.
According to my calculations, if my mother and father were to elect to take their pension books and walk the two and a half miles each way 52 weeks of the year, on the basis of the figures that the Department has given me of 44p per transaction, it would cost 44p, times 52, times two—to account for my mother and father—a total of, I think, £45·76. If the Secretary of State went to my mother and told her that she could have an additional £45·76 over and above the Christmas bonus in return for having her pension paid directly into her bank, I am sure that she, like many other pensioners, would consider that good value for money.
I have made it clear that it is certainly right that sub-post offices should be part of our social and rural policy. I am satisfied from what my right hon. Friend said this afternoon that this is an extension of choice. The hon. Member for Glasgow, Garscadden (Mr. Dewar) says that

he agrees with choice, so let us not forget that, until 12 May of this year, there was no choice for the payment of certain benefits—invalidity benefit, severe disablement allowance, sickness benefit, income support and unemployment benefit. None of those could be paid into bank accounts, so there was no choice. Now there is. The new regulations, in short, introduced more choice.

Mr. Connarty: I am glad that the hon. Gentleman has been able to secure his parents' future to the extent that they can go without their pensions for 13 weeks at a time, as they are paid in arrears. Will he ponder the fact that it is not possible to transmit money around the country at no cost? He might care to consider the massive cost of the disability living allowance shambles that the Government instigated by trying to put the system on one computer.
Where does the hon. Gentleman get the idea that any Opposition Member has suggested any element of compulsion? The worries began when people saw that the forms did not list post offices as an option, and thought that they would be compelled to use the banking method.

Mr. Brown: I readily acknowledge that many pensioners want a weekly benefit in cash. There is no problem for them. We do not seek to change that, as my right hon. Friend made clear this afternoon. Let the message go out to pensioners who want to receive their pensions in weekly cash from post offices that they will be able to do so, just as they have done in the past.
The hon. Gentleman says that the Opposition do not want to restrict choice, and the Opposition drew attention to the leaflets that the Post Office is putting out in which it appears to deny choice. I have with me a post office leaflet, issued by Post Office Counters, relating to child benefit. I also have a leaflet about pensions. Both leaflets make it clear that drawing the money could be done only through post offices—there was no other choice.
Because of the sheer quantity of cash sloshing around the country, £100 million is lost to fraud. I support anything that we can do to ensure that that money finds its way into the hands of genuine claimants.
Pensioners can relax. They should realise that the Government simply want to ensure that as much as possible of the £475 million now used for administration and transfer costs gets to the claimant. Reducing the public expenditure deficit must be our first priority, as I said during the debate on the Budget.
The hon. Member for Garscadden has some questions to answer. Perhaps one of his colleagues will answer them at the end of this debate. The Opposition have a duty to tell the House whether they would prefer cuts in benefits or cuts in costs. My right hon. Friend seeks cuts in administration costs so that there is no question of cuts in benefits. We are talking only of increases in benefits.
As recently as 23 April, the hon. Member for Garscadden said that he wanted to root out fraud. He claimed that he was anxious to get rid of any fraud in the system. My right hon. Friend and his colleagues in the Department are merely anxious to draw attention to the benefits of ACT so as to get rid of fraud—

Several hon. Members: rose—

Mr. Brown: I am conscious of having gone on longer than I had intended. Hon. Members know that I give way generously, but I think that I really ought to conclude.
To quote the Foreign Secretary, there has been a great deal of froth and bubble about this subject. In Lincolnshire, we would say that there has been a lot of candy floss; indeed, in north Lincolnshire we call this sort of event a great stitheram. That is what we have had from the Opposition today. The Secretary of State clearly said that claimants who want to claim cash from local post offices will be able to continue to do so. I ask the House to bear in mind the massive cost of transferring limited resources from the state to claimants, and to compare that with the savings that can be made through the ACT system.

Mr. Terry Lewis: On behalf of the Opposition and in particular of the alternative Bench on which I sit, I too congratulate the hon. Member for Newbury (Mr. Rendel) on his speech.
I am amazed by the attitude of the Secretary of State. The first time this matter was raised was 8 March, when I tabled an early-day motion 1539 about it. I did that before the campaign began, and before Newbury and the county council elections. It was even before the postmasters themselves had begun their campaign.
I raised the matter in the first place because constituents had complained to me about the possible closure not of rural post offices but of post offices in my urban area, where 11 sub-postmasters and mistresses administer pensions for the Secretary of State. This followed the pilot scheme in which 24,000 new pensioners in the north-west were sent certain forms. Those forms were loaded so as not to offer the post office system as an option. No wonder then that there was a problem or that people were suspicious. Given the Secretary of State's record—

Mr. Kevin Hughes: Surely, if there has been any scaremongering, it was started by the forms sent out by the Government. They offered no choice, so people thought that they would have no choice. That is why we have had hundreds of personal, handwritten letters from people who are worried about losing their post offices.

Mr. Lewis: My hon. Friend is right, of course. [Interruption.] I see that the hon. Member for Ribble Valley (Mr. Evans) is waving a leaflet: he is wide of the mark. My hon. Friend correctly states that the complaints started to roll in because of the wording of the Secretary of State's leaflet, not because of the subsequent campaign.
The Secretary of State should think for a moment not about pensioners who take their pensions three months in arrears but about those who go to post offices to collect their pensions with their groceries. He should think about those pensioners who are watched over by the sub-postmaster. In my area, if someone has not called for his pension by about 4 o'clock, the sub-postmaster sends somebody round to find out what is wrong and whether the old gentleman or lady is ill and needs to be looked after. Sub-post offices offer such social services.
I know that it is trite and that it has been said more times than "level playing field", but the trouble with Conservative Members is that they understand the cost of everything and the value of nothing. Nothing was ever truer. I would accept as a reasonable argument the possible saving of £500 million if the Ministers who advance it were not putting out glossy leaflets every five minutes. Hon. Members have all received from

Departments glossy excuses for Government policy. More money is spent on publicity by Departments than on administration. The Secretary of State smiles. I must have touched a nerve. Most of the publications are sent out to excuse mistakes and to try to brainwash people into believing that the Government know what they are doing.

Miss Joan Lestor: My hon. Friend and I are neighbours in the north-west and were at the receiving end of the concern over the form that did not make it clear that the post office was an option. Judging from the petitions that I have received, hundreds of people have been panicked into opting for ACT because they thought that they had to. Does my hon. Friend agree that the Secretary of State should give those people the facility to switch back to post offices?

Mr. Lewis: I was coming to that, because it is the nub of the argument. It is said that there will be choice and that some pensioners will accept ACT as a reasonable way to do business. However, the heat that has been generated on the issue will drive people into expense that will arise from collecting their dues. That is because many people cannot afford to have bank accounts. My hon. Friend the Member for Eccles (Miss Lestor) is right. There will he a haemorrhage of customers who would not normally choose to leave the post office.

Mr. David Sumberg: The hon. Gentleman is right to say that the matter affects urban areas. In my constituency it affects Ainsworth, Whitefield, Prestwich and Radcliffe. Whatever has happened in the past, does the hon. Gentleman accept that the Secretary of State has made it as clear as crystal that all our constituents, including the old and the disabled, will now have the ability to take benefits in cash if that is what they want?

Mr. Lewis: That is hardly the point. Before the debate closes at 7 o'clock, the Secretary of State should say that sub-post offices will remain intact and that the current negotiations will ensure that any diminution in pensions business will not result in any reduction in the income of sub-post offices, thereby forcing closures. The Secretary of State skirted around that question. He was challenged several times and did not see fit to answer in the way that I and my hon. Friends want.
The Secretary of State should speak to his colleagues at the Department of Trade and Industry about another threat. In my area the privatised electricity company, Norweb, is now ending a trial of cards that can be used on meters. One sub-post office that I know will lose £5,000 in revenue when that trial ends. The problems are caused by regulation and by Secretaries of State not understanding what is happening on the ground. It would be useful if that threat to sub-post offices were included in ministerial discussions.

Mr. Eddie Loyden: My hon. Friend speaks about cards for slot meters. Such devices undermine post offices and show the Government's dogmatic intention to destroy some sacred cows. The debate clearly shows that, whatever the short-term effects, long term, post office services will be undermined at that level and that will creep through to every level.

Mr. Lewis: My hon. Friend is right. That issue has been adequately covered by me and in some interventions.
I remind Conservative Members of what the Prime Minister said when he was selling the objectives of his citizens charter. He said that services to suit the customer would always be provided. I want to see services provided for the customers who need to use post offices not just to collect their pensions but for the social reasons that I have outlined. My hon. Friends agree on that. Sub-post offices provide a vital public service, and the Government should make it clear that they will discontinue any threat to undermine that service.

Mrs. Jacqui Lait: I do not want to rehearse the need for sub-post offices because the arguments have been eloquently put, especially by the new hon. Member for Newbury (Mr. Rendel), whom I welcome to the House. I am sure that we have all had experience similar to the lady's case that he outlined because, as good constituency Members, we are aware of the fundamental role played by rural and urban sub-post offices in the social milieu of our constituencies.
The Labour party and the Liberal Democrat party have been vociferous in their support for sub-post offices and I look forward to the promises that they will no doubt put in their next manifestos. It will be interesting to see what weasel words are used. I am glad that my right hon. Friend the Secretary of State has expressed his continuing commitment to the sub-posts offices and their continued financing.

Mr. David Hanson: Will the hon. Lady give way?

Mrs. Lait: No, because I should like to come to the meat of my speech and many hon. Members wish to take part in the debate.
We are debating post offices that reflect our current society, but we should be examining how they will reflect our future society. That is part of the argument for ACT. More and more retired people will be used to bank accounts and will wish to take their pensions through ACT. That will apply especially to those with occupational pensions. That means that there is likely to be a change anyway in the service that sub-post offices will be required to provide.
We have all received much mail from the elderly and those who are on benefits and wish to retain sub-post offices. I received a letter from two frail elderly ladies whose even more frail elderly brother is in a residential home. They said that they would like to cease visiting the post office to collect income support for their brother. They were frightened about carrying large sums and they were becoming too frail to go to the post office. They asked whether the money could go through their bank account.
It was therefore with enormous pleasure that I was able to reply saying that on 12 May, which was the date of their letter, new regulations had come into force which would allow them to use their bank. That is a measure of the need to change the functions of the post office.

Mr. Nick Ainger: How many letters did the hon. Lady have in her postbag asking for the cash to be paid directly to a bank account and how many from those asking for the continuation of the right to collect cash

from the local post office? The hon. Lady makes one point, but I think that she ignores the far larger case that I am sure has been made in her postbag.

Mrs. Lait: The point that I am making is that there is still a demand for changes in the services that sub-post offices deliver. They should be providing private sector operations. They do not belong to the post office: they are not branches of the post office: they are franchises of the post office. Those post offices should have the opportunity to deliver a much wider range of services.
I suspect that one reason many postmasters and postmistresses reacted so nervously to what happened is that over the past few years they have had a bad time, as have many other businesses. We need to widen the functions and services that they can offer. That is our responsibility, because what happens in post offices is, in many cases, constrained not just by custom but by statute. We need to consider what services post offices can deliver.
I think that all would agree that post offices are providers of cash. They could also be providers of cash from the banks. They could be providers of building society money in villages. They could be providers of tickets for road, rail and entertainment. They could act as reservation centres for such things. It has already been mentioned that they could provide and sell tickets for the national lottery.
The sub-post offices should consider offering—we have a responsibility to ensure that it is possible—the wider range of services that so many people want in order to live the sort of lives that they will expect to live in future. Perhaps we should also think of allowing the post offices a computer link so that money can be transferred with the minimum difficulty and they can offer the speedy and cheap service we are used to in other financial aspects of our lives.
I hope that when my hon. Friend the Minister replies he will be able to offer the assurances that we want so that the rural and sub-post offices can respond to the changing demands of society and can deliver a yet better service to those who wish to use them.

Mr. Eddie Loyden: The debate, and certainly the Secretary of State's speech, clearly suggest that the Government's intention is to undermine post office services. The misinformation or lack of information shows the Government's insensitivity to pensioners.
We have heard of a number of instances of people, particularly pensioners and those on benefit, who depend on being able to go to their post offices to receive the money that they require to sustain their life, and in some cases, their families as well.
I was somewhat surprised to hear about 13-week pension arrears. That is not common in the real world where people wait for their pensions to meet the cost week by week of rent, food and so on. Again, that is a measure of how remote the Government are from reality.
It was once said by one of the more reactionary elements on the Conservative Benches that the Government were destroying all of what they refer to as sacred cows, which in their view impeded the progress of private enterprise wherever it might occur. In the process of doing that, there has been no understanding of the value of certain things. As my hon. Friend the Member for


Worsley (Mr. Lewis) said a few moments ago, the Government appear to know the cost of everything and the value of nothing. They have given no thought to the social consequences of the proposal.
I hope that further thought will be given to this matter. I have already received not letters but petitions signed by concerned pensioners. Whether their concerns are grounded is of no consequence. They are concerned, and they have been made concerned by the Government, who failed to inform them properly about their choice, trying to push pensioners into a system that is more complicated than going to a post office. Whether one likes it or not, people of a certain age become less capable in dealing with certain aspects of banking and so on; that should be taken into account by the Government when they make proposals of this kind.
We all know that banks constantly review their charges, and we shall certainly see in the future not a reduction but an increase in those charges. Once pensioners are trapped by the banks, they will have to find additional money for such charges, which will reduce the value of their pensions. That is another factor that the Government should take into account.

Mr. Ainger: I do not know whether my hon. Friend has had an experience similar to one that I had recently in my surgery, when two constituents found that their mortgage interest payments, paid direct from the Department of Social Security into their bank account, had, for various reasons, been delayed. Because they had a series of standing orders, their account went into the red and, as a direct result of mistakes made by the Department of Social Security, they now have to pay substantial bank charges which they cannot afford. Many pensioners are afraid that, if their money is paid directly to the bank, something similar will happen to them.

Mr. Loyden: I too am concerned about that. Experience will show that that will happen. Banks are not perfect organisations. Instead of, as I used to do, paying my landlord or the collector every week when he came to the door, my rent is now paid through the bank, and I have found myself with arrears of £565 because of the time that the transactions have taken. People, particularly the elderly, are worried about problems that might arise from accountancy procedures, and that is something that they can well do without.

Ms Glenda Jackson: Conservative Members spoke about the enormous amounts that are lost to the Treasury through social security fraud, but they made no mention of the even larger amounts that are being lost by the commercial and high street banks through a different kind of fraud at cash tills and via bank cards.

Mr. Loyden: My hon. Friend makes an important point. As I said, banks are not perfect institutions, and that is a good example.
The Government have pursued policies without paying any regard to those who will be affected by them. The House will he well advised to vote against the Government, who should then re-examine the rundown of post offices, not only in the past 10 or 15 years but longer than that. Crown post offices have been closed and substituted by smaller offices, resulting in queues of pensioners. Those queues can be eradicated by reinstating

Crown offices, so that people can transact their business in comfort and enjoy the efficiency of which the Post Office is capable. The Post Office code of practice clearly states how business should be conducted.
I hope that the Government will recognise that the post office services should be maintained. This latest development is another step towards undermining the whole post office service.

Rev. Ian Paisley: I am the only Ulsterman who is able to be present because Ulster is in the middle of council elections, but I am glad that at least one Ulster voice will be raised on the side of old-age pensioners and others who are deeply concerned.
The remark of the hon. Member for Brigg and Cleethorpes (Mr. Brown) that the majority of pensioners could wait 13 weeks in arrears for their pension was unreal. In another apparition, the hon. Gentleman is parliamentary private secretary to the Secretary of State for Northern Ireland. He ought to visit Northern Ireland to hear what senior citizens there have to say about the Government's proposal. I do not believe that the parents of whom the hon. Gentleman spoke would have walked to the post office; they probably had a car and could have driven there. If they had to visit the post office, they would have visited the bank also. The hon. Gentleman spent a ludicrous amount of time trying to persuade the House that a large number of pensioners would prefer to be paid by ACT.
In Northern Ireland, the sub-post office is part of the cement of the community. It is vital in keeping the community together. We have lost village schools, smaller churches, and the other cement of society. Today, the village and rural sub-post office provides a focus, a place where people can meet and talk and where the needs of pensioners are well known by the sub-postmistress or sub-postmaster. When a pensioner does not arrive to collect his or her pension, the sub-post office staff know that something is wrong and will make inquiries; there is no doubt about that. Many relatives have paid tribute to the staff for the care that the elderly have received as a consequence of their contact with the local sub-post office.
I would have been happy if the Secretary of State had given an unequivocal assurance that things would carry on as in the past, but he did not. He spoke of a viable national network of sub-post offices. I have heard about viable national networks of public transport or railways, but when big finance came to bear, both were axed. I was amazed to hear the Secretary of State say that the best way to save money was by using ACT. He argued with such strength that perhaps overshadowing this debate is an axe over sub-post offices. Anyone who hears this debate will agree.
One hon. Member said that he backed the Government but admitted that the original form could have been clearer. That is where it started—not as a political way of getting at the Government, but with a form which was unclear. After 22 years' membership of the House, I have some experience of large postbags, but no constituency issue has ever brought a bigger one than this issue. I have also been on doorsteps for the council elections. I am glad to see that the hon. Member for Upper Bann (Mr. Trimble) is now in his place; he mentioned this point in the


local press. At the door, every pensioner has raised the issue and spoken of his or her concern. Their fears should be acknowledged.
It is a question not of scaremongering but of fear. If Members of Parliament and sub-post office officials want to raise the issue, they are entitled to do so. That is not scaremongering against the Government. The Government can put the matter to rest tonight by saying that they will maintain a sub-post office in every community.
The Secretary of State said that, even if trade is taken away from sub-post offices, they will be paid the same grant. Does any right hon. or hon. Member believe that? We are asked to make fools of ourselves and to accept that, as post office business declines, sub-postmasters and mistresses will still be paid the same.
This debate has given the House a valuable opportunity to express the feelings of senior citizens. I am glad that the Government have at least done part of a U-turn. To begin with, they would do nothing, but now they are under pressure. They should face up to it and give an undertaking that they will maintain post offices for the sake of the communities that they serve.
Some hon. Members have argued that pensioners should not carry large sums of money home. A weekly pension is not a large sum of money. I wonder how many of the people who make that argument have ever spent any time with pensioners, who budget not for 13 weeks but for one week. They have the money in their hands to deal only with the needs of the week. It is ridiculous to say that pensioners can budget 13 weeks in arrears.
We should heed the cries of a valuable group of people who have served their day and generation well. The House owes them a copper-fastened assurance so that their fears can be laid to rest.

Mr. Bill Michie: It is no surprise that on this occasion I fully agree with the hon. Member for Antrim, North (Rev. Ian Paisley). The hon. Gentleman put his finger on our real worry. Also, it may come as no surprise that I am suspicious when I hear a Conservative Secretary of State assure the House that everything will be all right at the end of the day and that there is no real threat to our sub-post offices because the Government will find ways of helping them out. Over the years, this Government have said, "Don't worry about factories closing down; we'll build others to manufacture different products." I wonder, therefore, why more than 4·5 million people are still unemployed. The Government's assurances appear to have no credibility whatsoever.
The Secretary of State and other Ministers have said on more than one occasion that the purpose of the exercise is to save money. They wrap up that argument with the protection of old-age pensioners from being mugged. I do not know what to say about that argument. As the hon. Member for Antrim, North said, if we gave pensioners more money, mugging might be an attraction, but it is not a sufficient attraction at the moment. The Government shoot themselves in the foot on some occasions. They are something of head bangers, anyway.
If the Government want, for example, to save £50 million, a large percentage of the sum saved will be lost by

local post offices, many of which are struggling to keep open. The Secretary of State assured the House that new contracts are being negotiated. He said that post offices will obtain new business from selling national lottery tickets, but everybody else will be selling them too, it seems.
People view their post office with great respect. They believe that it provides a good service in a variety of ways. They do not regard their post office as a glorified betting shop, or as a bookie's runner. If the only option left to post offices is to become glorified betting shops, the Government will have lost the argument. That is not the kind of service that people want, particularly the old, the sick, the disabled and the vulnerable.

Ms Ann Coffey: Does my hon. Friend agree that we want to preserve choice for the elderly about the way that they collect their pensions? If the Minister is serious about providing choice, does my hon. Friend agree that the forms that the civil service designs should be simple, straightforward and easy to understand? My constituents often complain that civil service forms are complicated and incomprehensible.

Mr. Michie: My hon. Friend is absolutely right. She made that point far better than I could have done. It has been referred to more than once during the debate.
The Secretary of State admits that millions of people do not have bank accounts. Most of them are poor. People with a reasonable job and income usually acquire a bank account, but the poorest and most vulnerable—those who rely absolutely on benefits—do not have bank accounts. There is no reason for them to have bank accounts, for they live each week from hand to mouth.

Mr. Nigel Evans: The very poor and vulnerable are exactly the people who have been targeted during the campaign. It is shameful that the fear has been piled on that their post offices will be closed. Opposition Members have a great opportunity this afternoon to discuss the future of our post offices, but they have not put forward one credible alternative. They have said nothing about the way in which post offices may be able to build up their business. Will the hon. Gentleman draw attention to those services that post offices may be able to provide in the future?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Before the hon. Gentleman does so, I remind hon. Members that many of them are hoping to catch my eye and that long interventions do not help.

Mr. Michie: That was a very interesting, if too long, intervention. The hon. Gentleman invites us to enter into negotiations on the closure and the death of some sub-post offices. That is not the role of the Opposition. The hon. Gentleman referred to the future. According to the Government, the future of sub-post offices is safe. But people are worried. We are not scaremongering. This is what ordinary people say. I have never believed that the Government's attempts to save money benefit people such as those who use post office services.
Hon. Members have received thousands of letters from people from all walks of life who are worried about this issue. Many of those who come to our surgeries are worried about it, too. I have had a letter from a constituent who says that since bus deregulation there are no local bus services. She says that she can walk to the post office,


which is not far away, but that if she had to go anywhere else for her pension she would be faced with a problem. Her husband is totally disabled and she has difficulty in walking.
In another letter an 86-year-old says:
I am 86 years old, housebound with arthritis and poor sight. At present I rely on a friend to collect my pension weekly from the local PO down the road.
The friend may be able to fetch that person's pension from the bank, if it were possible to get clearance from the bank to do so, but this is all hassle which, frankly, that 86-year-old does not want.
Another letter makes a very good point. The writer is disabled; so is her husband. They rely on a home help service, a service that is already stretched. The home help goes to the post office to collect their pension. It is a local post office and a local home help service. The home help would be unable to travel out of that area to the bank —if, again, it was possible to obtain permission from the bank to collect their pension. That is a service that will disappear if local post offices close.
Some people go to the other extreme. I have a letter from a constituent who believes that this is some form of Conservative plot. He calls it old-age cleansing. It appears to be a humorous letter but it contains a serious point. It says:
As the older generation are now living longer, do you think in order to save money on pensions the Government are embarking on a subtle policy of ethnic cleansing of O.A.P.s. First they put V.A.T. on fuel in order that many may die of hypothermia, then they propose to close local post offices so that we shall have to go further to collect pensions from banks etc and succumb to traffic accidents in the process. Thirdly I hear that they also propose to withdraw the prescription service from local chemist shops so that we may pass on before we can get our tablets.
All the Government's actions over the past decade or so have affected the most vulnerable people in our society; there is no argument about that.
The Government may believe that saving money is much more important than providing services. They may believe that it is not important that the most vulnerable people in our society have the services and care that they require, providing the economics are acceptable. However, we care. However humorous Conservative Members may find it, we shall continue to fight and raise the issue of injustice to the poor whenever the opportunity arises.

Mrs. Angela Knight: I do not represent a rural constituency, but I too have received many letters from pensioners who are worried about the future of local post offices. I believe that the people who have expressed such concern to me can take genuine comfort from the Secretary of State's statement this afternoon in which he pledged himself to ensure that we continue to have a viable network of sub-post offices. He also underlined the fact that pensioners will be able to continue to draw their pensions from the local post office if they wish.
I take issue with some of the remarks made by the hon. Member for Sheffield, Heeley (Mr. Michie), who rather dismissed the notion of "cost saving". We should examine the issue closely because the delivery of Department of Social Security benefits costs about £650 million, of which just over half goes to the Post Office and a fraction to sub-post offices. The rest—about £300 million—goes in administration and fraud.
I cannot justify a system which costs that much to administer and loses that much in fraud. Every £1 that is spent on administration or lost in fraud means £1 less available for benefits. I can fight for an efficient system which ensures that social security money goes to those who should receive it, but I cannot fight for a system which costs too much to administer. Therefore, I do not take administration costs and fraud as lightly as the hon. Member for Heeley.

Mr. Ainger: I am grateful to the hon. Lady for giving way, especially on the issue of administration costs. Does not she accept that many of the administration costs are paid direct to the sub-post offices for the work that they carry out? It does not square with the Secretary of State's assurance that he will continue to support sub-post offices while at the same time making massive cuts in the administration. One cannot have one without the other.

Mrs. Knight: The sum of money that goes to sub-post offices is fairly small, as I am sure the Minister will emphasise later.
The Post Office is treated with great respect. Costs should be kept to a minimum, but there is a need to ensure that we have a network of post offices, not only because some 35 per cent. of pensioners still wish to draw their money in cash but because post offices are the huh of so many local communities.
However, one must recognise that a change is taking place. More people have bank accounts and building society accounts and pay for goods by cheque. We must ensure that there is a choice. Increasingly, pensioners, choosing not to collect their pensions in cash but to collect them from the bank. Therefore, the amount of money going through local post offices is declining, as it the frequency with which people visit them. We need to examine the issue, therefore from a wider viewpoint to discover whether the role of post offices can be enhanced.
The letters that I receive mention various services that constituents want to receive from their local post offices. That applies not only to rural post offices but to those in the suburbs of towns such as those in my constituency. Post offices must be allowed to conduct more and different types of business.
I have three suggestions. First, only some post offices are allowed to issue vehicle licences. That task is essentially limited to Crown post offices and a few others. Ilkeston in my constituency has about 35,000 inhabitants but only two post offices that will issue motor vehicle tax discs. One is the old Crown post office, near which it is impossible to park, and the other is a small office tucked away on one side of the town and very difficult to find.
Local people organised a petition, which I supported, asking for another post office to become a motor vehicle licensing office. The regional manager said that he could allow only a certain number of vehicle licensing offices in the area, and only two were allowed for Ilkeston. I took the matter up with the Department of Transport, which could not help me. I urge my right hon. and hon. Friends to consider allowing more post offices to offer such a valuable service, because it is one that people want. and it would bring more business to post offices.
My second suggestion has already been made by my hon. Friend the Member for Hastings and Rye (Mrs. Lait). We should enable post offices to offer additional financial services. My local sub-post masters certainly wish to be


able to do so. An estate agency can be an outlet for a building society, and I believe that sub-post offices should also be allowed to provide that service.
I understand that there is some confusion about what they can and cannot offer in the way of financial services. One of my local post offices has a contract which states that it cannot offer any financial service which could be deemed to compete with its Post Office duties. That regulation should be examined, because post offices want to increase their financial services, which would bring in more people and increase their viability.
I also make a plea for post offices to be able to sell tickets for buses, the railway, theatres and the national lottery. I do not knock the national lottery as Opposition members have done because it will be popular. Allowing post offices to sell such tickets will enhance the range of services which they offer.

Mr. Nigel Evans: Is it not clear from what my hon. Friend and my hon. Friend the Member for Hastings and Rye (Mrs. Lait) have said that we are talking about a sustainable future for all post offices—opening them up to allow them to provide more services for the elderly and others in our villages and towns? The Labour party wants to fossilise the Post Office and make its running costs burdensome to the very people we want to help.

Mrs. Knight: My hon. Friend makes the point well. We seek to provide even more valuable services for the community, so that more people will go to the post offices, thus allowing a diversification of business so that they can meet the changing requirements of the people whom they serve.

Mr. Hain: I welcome the hon. Lady's contribution, but the person responsible for blocking the ability of local post offices to provide that additional range of services is the Under-Secretary of State for Technology. The Government should change their policy. In some local village post offices, such as that in my home village of Resolven, about 50 per cent. to 60 per cent. of business —if not more—comes from benefits. If that were taken away, or even a slice of it, they would be forced to close.

Mrs. Knight: I am trying to make it clear that I seek to enhance the role of post offices, not limit it to the traditional duties which they have undertaken. I am sure that the Minister will deal admirably with that topic when he winds up the debate.

Mr. Connarty: Does the hon. Lady not accept that those are the policies in the Labour party manifesto, which Conservative Ministers have refused for years to adopt? They refused to adopt those policies when my hon. Friend the Member for Neath (Mr. Hain) suggested them in a recent Adjournment debate.

Mrs. Knight: The Labour party made no mention whatever in its manifesto of maintaining the viability of the sub-post office network. In this debate, too, the Labour par.), has missed all its opportunities to support post offices and to say how they should develop and provide more services to their local communities. I am sorry that the Labour party has missed those opportunities.
My third suggestion is the result of a conversation with the excellent manager of the sub-post office at Ockbrook,

in my constituency, who told me about the various charges that are made when people pay water, gas and electricity bills. Apparently people can pay their water bill at the post office in cash or by cheque at a cost of 15p—less than the cost of a stamp to send a cheque to the company.
However, anyone who wishes to pay his gas or electricity bill at the post office can do so only in cash, at a cost of 80p. The water authority has provided an excellent service for people who wish to pay their bills in that way, and I am urging my local gas and electricity companies to do a similar deal, so that their bills can be paid in the same way through the local post office. I am sure that my hon. Friends, too, will urge their local electricity, gas and water companies to make the same arrangments as the water company in my constituency.
I understand that some of the matters that I have raised are not within the jurisdiction either of the Secretary of State for Social Security or of the Under-Secretary of State for Technology, but I hope that they will consider carefully the matters for which they are responsible, so that we can maintain the valuable service to the local community, and our post offices can be fostered and allowed to develop in a way that benefits the changing society in which we all live.

Mr. William McKelvey (Kilmarnock and Loudon): I am glad that the debate is taking place and I congratulate Opposition Front-Bench Members on selecting the subject. Whatever our views are, whatever we may say, and whatever the Government may say about the rights and wrongs and the motives involved—whether the forms were badly designed either deliberately or carelessly, whether there was any intention of hoodwinking old-age pensioners, or whether the Government attempted to protect them—pensioners and those who look after their interests will ensure that what is said in the debate is dispatched to the post offices and sub-post offices so that people can chat among themselves and make up their own minds. That is the essence of a democratic structure.
When that has happened it will be interesting to find our whether we receive another load of letters from pensioners expressing their views about whether the debate was necessary and about what we may have unmasked or uncovered. Like most hon. Members, I have received letters and petitions directly from old-age pensioners in my constituency—280 of them, in fact. They are not mass-printed petitions that people can easily sign; most of them are handwritten letters from people who are not terrified but who are genuinely and honestly concerned.
They are articulate, too. We do our pensioners a disservice if we think that they cannot articulate their own case or make up their own minds, or assess whether there is threat to their sub-post offices.

Ms Janet Anderson: May I draw my hon. Friend's attention to a survey done in my constituency by the Blackburn and district branch of Age Concern? It was initiated by Councillor Kevin Durkin and was published today in the Lancashire Evening Telegraph. Of the 150 pensioners interviewed, 93 per cent. received their pensions in cash at their post office and none of them said that he or she wanted to change to a different method


of payment. Does my hon. Friend agree with one of the pensioners interviewed, who said that the Government's plan was the daftest idea since the poll tax?

Mr. McKelvey: I totally and unequivocally agree with those sentiments.
There are 19 sub-post offices in my constituency. That may not sound a lot, in view of the fact that my hon. Friend the Member for Pembroke (Mr. Ainger) has more than 80 in his constituency. The scale of the problem of closure will vary from one constituency to another. Perhaps I can best illustrate the problem by describing the village in which live, outside Kilmarnock.
As one comes into the village there is a church, a small supermarket, a newsagent, a fish and chip shop, a Chinese carry-out shop, a masonic lodge and social club and a bowling club with a social club. We also have three pubs, another newsagent, a garage, a garage showroom and a resident Member of Parliament. What more could anybody want? That may not be the idyllic village scene depicted in the Hovis advertisement, but it is a viable village and at the moment we can sustain that viability and variety.
By the way, I missed out the bookie, but that was because his establishment is next door to a vacant shop which used to be the bank. When the banks in Kilmarnock started to close what they called their satellite stations in the villages, every village got up a petition and tried to persuade them to change their minds. But the banks said that because of economies of scale, because of the difficulties of the recession, and because robberies were taking place in the village banks, they had to withdraw the facilities.
The withdrawal of banking facilities created difficulties for those who used bank accounts, even if their pensions were paid into the bank. 13ecause people could no longer go into the banks to withdraw their money—or to deposit money, for that matter—they had to travel to Kilmarnock to do their banking if they did not have a post office account. That often meant that they then spent their money in Kilmarnock. The economy of Kilmarnock is not suffering because of that, but the viability of the village is and the whole community is beginning to suffer because of the lack of a bank. Even the bookmaker complained to me about that.

Mr. David Hanson: I wonder whether, when the Minister replies to the debate, he will define viability. I should like to know where my hon. Friend's post office and the 33 post offices in my constituency fit into the viable national network that has been mentioned. So far as I can see, it will not include the vast majority of the post offices in my constituency and probably not the post office in my hon. Friend's constituency, either.

Mr. McKelvey: The total income of the sub-post office in my village is derived from payments of benefits and from selling stamps and perhaps the odd birthday card. It has not diversified into haberdashery or anything else of that nature, nor is it licensed to sell spirits and cigarettes. All those facilities are already available in the village. The post office does not have to put a petrol pump outside and diversify into selling petrol, as post offices in some rural villages may do. I do not see how my post office can diversify into any areas, other than the sale of lottery tickets, without taking trade away from existing outlets in the village.

Mr. Connarty: Will my hon. Friend give way?

Mr. McKelvey: I am sorry, but I running out of time and I know that the Front-Bench spokesmen want to start winding up as soon as possible. If any hon. Member who has sat here throughout the debate has not yet had the opportunity to intervene, I would gladly let him or her in, but I shall not give way to anyone who has already spoken.
As I have said, I have received 280 personal letters from elderly people. I have chosen one of those letters to read to the House, not because it is terrifically articulate, but because it is typical of the representations that I have received and expresses an attitude that I completely understand. It was not written in panic, either. My constituent writes:
As a pensioner I say 'Hands off the Sub Post Office.' We cannot afford bank charges or the inconvenience of banks. Also we cannot take our pensions in arrears or once a month because we simply could not afford to live. This is another nail in the coffin of freedom.
Freedom of choice is the important thing. The letter concludes:
I and thousands of others demand the right as to how our pension is paid.
If Ministers tell us that the right of all pensioners and claimants to draw benefit at the post office will be protected, the debate will have done a tremendous service. We shall have gone some way at least to allaying the fears of pensioners about the threat that they face and the fears of those who work in sub-post offices about their future. I look forward to hearing from the Minister that he will safeguard the incomes of the sub-post offices and, more important, that pensioners will be able to continue, as of right, to draw their pensions as they wish to draw them.

Mr. Jim Cousins: I congratulate the hon. Member for Newbury (Mr. Rendel) on his gracious and thoughtful references to his two predecessors. I am sure that their friends and the whole House will appreciate the content and the tone of his remarks. We look forward to hearing further from him in future.
I congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on the debate that he initiated the other night and thank all the hon. Members who spoke in that debate, during which we heard some telling rebukes to the Government from the hon. Member for Rochford (Dr. Clark) about the quality of the forms about which we have heard so much today. On that occasion, the House was treated to the remarkable spectacle of the Parliamentary Under-Secretary of State for Corporate Affairs presenting himself in this context as the latest in a long line of caring liberals. I fear that the transformation is not complete, but we live in hope.
I congratulate my hon. Friends the Members for Don Valley (Mr. Redmond), for Worsley (Mr. Lewis), for Liverpool, Garston (Mr. Loyden) and for Sheffield, Heeley (Mr. Michie). I also congratulate my hon. Friend the Member for Kilmarnock and Loudon (Mr. McKelvey). I am concerned lest my hon. Friend should decide to take up residence at the bookie's or in the masonic lodge, although I recognise that some of these matters are ordered differently north of the border.
The Government's wish to switch payments of pensions and benefits to banks and building societies has been made crystal clear in today's debate. It is part of their planned


intention and has been set out in the Secretary of State's speech today and in the Department's report to the House in the public expenditure statement last autumn.
I fear that it is also clear that the full facts of the matter have not been heard. Much has been made of a comparison of transaction costs—3p through banks and building societies and 44p through post offices. Will the Minister confirm, however, that half the pensions processed by post offices in Britain bear a direct handling charge to those post offices of less than 12p and that the comparisons that have been drawn tonight are wholly inaccurate?
May I also draw the attention of the House to the fact that, in addition to the transaction costs to the Government which have been made the subject of the comparisons, there are transaction costs to the people receiving pensions and benefits? It is crystal clear that, if payments are transferred to banks and building societies, hidden transaction costs will be borne by those who use those banks and building societies to process their pensions and benefit claims. That significant factor has not been brought into the equation.
My hon. Friend the Member for Kilmarnock and Loudoun and the hon. Member for Antrim, North (Rev. Ian Paisley) made the point clearly: what the Secretary of State said did not amount to a clear statement that a fairly and equally weighted choice will be given to future pension and benefits claimants. We have heard only that the existing, thoroughly rigged, choice may be withdrawn. The Government must give the assurance that pensioners will have a full and fair choice of payment methods and a guarantee that the advantages and disadvantages of each payment method will be fairly spelt out. It is simply not right that future pensioners—many of whom will not have bank accounts—should be confronted by forms telling them that banks have interest-bearing accounts without similarly pointing out that bank accounts can incur charges. The present comparison is not fair and it is not right to put it before pensioners and benefit claimants.
The Secretary of State says that he believes that the issue is not of great significance, because sub-post offices are paid a fiat rate fee. His remarks were published, although not in quotation marks, in today's edition of The Times and he made the point again during the debate.
Does the right hon. Gentleman recognise that that is a wholly misleading and untrue statement? It is simply not the case that sub-post offices are paid on a flat-rate basis. They are paid on the basis of transaction unit payments which vary according to the number of transactions that take place. It is true that, to secure the viability of some of the very small sub-post offices, a minimum payment is made, but that is entirely different from the flat-rate payment that the Secretary of State clearly stated was the basis of payment to sub-post offices. It is not.
I should be grateful to be informed, if the facts can be presented, what Ministers think that minimum payment is. I shall cheerfully give way so that they can inform the House what order of advantage is given to the barely 10 per cent. of post offices that receive it. I repeat that it is not a flat-rate payment but a minimum payment. I should be delighted to hear what the Government think that payment actually is. We look forward to enlightenment on that point, on which for the moment there is total silence.

The Secretary of State should recognise that he has totally misled the House about the method of payment to post offices. He may regard that as a matter of no great significance, but the sub-post offices, which will be informed about the debate and which anxiously await its outcome, will certainly bear it in mind.
The Post Office operates an internal cross-subsidy arrangement that is weighted in favour of the smaller post offices. That has been a feature of cross-subsidy within the Post Office's accounts since the Liberal Government of 1908. The future of the smallest 7,500 sub-post offices, which do only 6 per cent. of the total volume of the Post Office's pensions and benefits business, depends vitally upon that system of weighted payments.
It would be a tremendous advantage to those involved, many of whose businesses are in great difficulty because of the current difficult economic circumstances, to be given a clear statement from the Government tonight to the effect that that system of cross-subsidy, on which they and their predecessors have depended since 1908, will continue to be a feature of the Government's policy towards sub-post offices. If the Government cannot guarantee the continuation of that transaction unit cross-subsidy, they cannot secure the future of the network and all their assurances and manifesto promises about their guarantee of a universal service and network of post offices are unreal and worthless.
The 20,000 sub-post offices know that, and they are looking to the Government to clarify the point tonight. Without that cross-subsidy and system of weighted payments, the whole viability of the post office network will be brought into doubt.
It might suit the Government if the 5,000 small post officers referred to by the chief executive of the Post Office went out of existence. If the network was truncated in that way, it is possible that the Post Office Counters Ltd. network would be easier to sell off. However, the Government must recognise that an enormous amount of political good will, economic good will and social good will would be lost if that were to happen.
What does the universal service network, which the Government say that they have in their manifesto, promise? What does it mean? At the moment, 60 per cent. of urban and rural parishes contain a post office. Does the commitment to a universal service network mean that 60 per cent. of urban and rural parishes will continue to have the benefit of a sub-post office?

Ms Jean Corston: Does my hon. Friend agree that people believe that the threat is serious? That is evidenced by the fact that, in Bristol, 1,141 signatures were appended to a petition in three days last week in Redcliffe post office. Is not it significant that, while the majority of the people who signed that petition and who use that post office reside in my constituency, the post office itself is in the constituency of the Chancellor of the Duchy of Lancaster. the right hon. Member for Bristol, West (Mr. Waldegrave)? There may be implications for the citizens charter in relation to the element of the freedom of choice.

Mr. Cousins: I confirm what my hon. Friend said and that experience is repeated around the country. However, I regret to say that, with longer experience of the House, my hon. Friend will find that turkeys do vote for Christmas and the Chancellor of the Duchy of Lancaster may be one of them.
Forty-one per cent. of the business of the sub-post office network is accounted for by pension and benefits payments. The undermining of that financial commitment undermines the viability of the whole network.
The hon. Member for Antrim, North was right to be concerned about the position in Northern Ireland because half the business of sub-post offices in Northern Ireland comprises pension and benefits payments. That is the highest proportion in the United Kingdom. I hope that hon. Members from Northern Ireland will take these matters fully into account when they consider how to vote tonight and how to vote in the future when such matters are considered.
Much has been made of opening up the sub-post office network for other kinds of business. This is a Government of deregulation. The hon. Member for Ribble Valley (Mr. Evans) can rest assured in the knowledge that none of us would have doubts about opening up the sub-post office network to wider commercial business and allocating it that task. However, we are waiting for the conclusion of the Government's review of the Post Office which has taken far too long and no proceedings of which have been reported back to the House or the other place.
Furthermore, the Department of Trade and Industry is capable of misunderstanding popular feeling. It misjudged the reaction to the closure of 31 pits and the sacking of 30,000 miners. I have bad news for the DTI tonight. Post office surveys indicate that the smallest 5,000 post offices employ 25,000 people. We have an issue before us—the viability of the smaller sub-post offices—which is as dramatic in its employment consequences as the closure of the coal mines.
The post offices have been rocked by the recession, but their business has held up better than that of the banks and building societies to which the Government want to send the business. The reduction in the number of bank and building society branches has been proceeding far faster than the reduction in the number of sub-post offices. The post office network is larger, more robust and more resilient than the network of bank and building society branches. It would be wrong for the Government, through their decision about the method of pension and benefits payments, to rig the market in favour of the banks and building societies and against the interests of the post offices.
The Government do not appreciate the fact that when we talk about sub-post offices, we are talking about self-employed people. We are talking about people who run small businesses. The Government talk about privatising the Post Office. The fact is that the bulk of the counters network is privatised already. One thing that could be said with great advantage tonight is that the Government will withdraw their proposals to privatise the counters network. The Government could justify their U-turn readily by saying that it is already privatised. That is a wonderful get-out for the Government. The door is open and we would all welcome them going through it.
However, the Government have already today chosen to make war on the sub-post offices—[HON. MEMBERS: "Nonsense."] The remarks of Conservative Members carry a clear message. References have been made to Timex and to picket lines and the sub-post offices have been brought into that setting. That message will go out to the sub-post offices.
Like many of the people they serve, sub-post offices live from week to week. They are small businesses that provide

a community service and they are trying to continue in the face of difficult economic circumstances. They will be looking to the results of this debate. From the reaction of the people they serve, they know that the people of this country value them and wish them to be protected. If the Government take any other course, they will rue the day that they set out on it.

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh): If I may, I would like to begin by referring to the excellent maiden speech of the hon. Member for Newbury (Mr. Rendel). The whole House enjoyed his speech, which was a classic of its type in its lyrical description of a constituency which the hon. Gentleman loves and where he lives. We on the Conservative Benches were very grateful for his very kind comments about Judith Chaplin and Sir Michael McNair-Wilson, who were obviously very valued colleagues of ours.
We welcome the hon. Member for Newbury to the House. As my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) said, we do not know whether it will be for three or four years, but we welcome the hon. Gentleman to the House and we welcome his comments today.
I am glad to have the opportunity to reinforce the message that we are absolutely committed to maintaining a nationwide network of post offices.

Mr. Ainger: Will the Minister give way?

Mr. Leigh: I have hardly started, so I can hardly give way. I will explain what I mean in a moment.
The Conservative party is the only party with an election manifesto commitment to maintaining such a network, and we have made it clear on many occasions in the House and subsequently that we will stick by it. That point was made by my hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway), the first Conservative Back Bencher to speak in the debate, and it was repeated by every Conservative Back Bencher to speak after him.

Mr. Ainger: The Minister, the Secretary of State and the Parliamentary Under-Secretary of State for Corporate Affairs are all current or past members of the No Turning Back group. Page 14 of the group's document, "Choice and Responsibility—the Enabling State", states:
The post office monopoly can no longer be justified.
Does the Minister still hold that view?

Mr. Leigh: Actually, members of the No Turning Back group are in the majority on the Government Front Bench. We are never bound by pamphlets that we wrote in our youth, I assure the hon. Gentleman.
I say to the hon. Member for Don Valley (Mr. Redmond) that I and my colleagues in the Government are well aware of the vital importance of post offices in our rural and urban local communities. I point out to the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) that I have 78 post offices within my constituency, although sadly not one in my own village. There are no pubs or clubs, but, as the hon. Gentleman said, there is a Member of Parliament, and that is probably good enough.
My hon. Friend the Member for Hastings and Rye (Mrs. Lait) made it clear that sub-post offices are an


integral part of rural and urban life, and we will keep them. I reassure the hon. Member for Worsley (Mr. Lewis) that the Government remain absolutely committed to maintaining the nationwide network of post offices.
The hon. Member for Antrim, North (Rev. Ian Paisley) asked us what we mean by that commitment. I mean a service that is readily accessible by everyone and to everyone in town and country alike. That does not and cannot mean that no post office will ever close—that would be absurd. People move to different areas; they change their shopping patterns. The network has to be kept sufficiently flexible to adapt to those changes. As my right hon. Friend the President of the Board of Trade made clear when in July he announced his review of the Post Office, that commitment is non-negotiable; it is in our manifests, and ours is the only party with such a commitment in its manifesto.

Mr. Hain: Will the Minister give way?

Mr. Leigh: No; I have insufficient time.
We have been debating the important issue of the payment of pensions and other benefits by automated credit transfer. My right hon. Friend the Secretary of State has already explained why our policy is to encourage—I underline that word—more beneficiaries to have their benefits paid by ACT on a voluntary basis. I do not propose to repeat what he has said. However, I emphasise to my hon. Friend the Member for Erewash (Mrs. Knight) that my colleagues and I well understand the importance of social security work to sub-post offices. It represents, as the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) said, at least 30 per cent. of all Post Office Counters' turnover, rising to as much as 50 per cent. in some smaller rural offices.
What has not been fully understood this afternoon is that the option of direct payment into bank accounts has been available for at least 10 years. Therefore, as my hon. Friend the Member for Brigg and Cleethorpes said in his north Lincolnshire dialect, this has really been a great stitheram about nothing, because that option has existed for 10 years.

Mr. Dewar: I want to be helpful and I hope that I shall get a clear answer from the Minister. Will he guarantee that in any future forms that are issued. on which people will nominate how they will get payment of their pensions, there will be a clear commitment to equal treatment of all options—in other words, that there will be no question of the Post Office disappearing into an addendum or disappearing off the main part of the form?

Mr. Leigh: I give a commitment that their right to take up their pensions with the Post Office will be clearly stated, as indeed it was stated in the forms that we are talking about.
ACT is an option that has gradually been taken up by pensioners and others, yet total Government business transacted through post offices has in fact increased during each of the past three years, in spite of increased use of ACT. We do not now expect any sudden increase in the numbers making use of ACT. I say to the hon. Member for Kilmarnock and Loudoun that experience over the past

decade simply does not bear out fears about the future of post offices of the kind that have been expressed today by the Opposition.
As my right hon. Friend the Prime Minister made clear only yesterday, pensioners will continue to be able to receive pensions from most post offices. It is not Government policy to remove the right of pensioners to receive their pensions from the Post Office. I hope that that is an unequivocal statement: it is clear, the Prime Minister made it yesterday, and I have repeated it today. We are encouraging people, as my right hon. Friend the Secretary of State has said—we have been encouraging them for many years—to receive their benefits through their bank accounts, but only on a voluntary basis. I will take no lessons from Opposition Members about the importance of choice. We have always been the party of choice, and, as the party of the citizens charter, we will remain so. We are extending a choice of payment method—

Mr. Connarty: Will the Minister give way?

Mr. Leigh: No, I will not give way.
We are extending a choice of payment method to those receiving all types of DSS benefit; we are not restricting that choice. To suggest otherwise is misleading scaremongering, and we have had plenty of scaremongering today and in the weeks leading up to this debate.

Mr. George Walden: Will my hon. Friend give way?

Mr. Leigh: I had better not, if my hon. Friend will allow me, as I have only six minutes left. I must reply to the points that have been made.
Concern has been expressed today and during recent weeks about the trial that was recently undertaken to test —I emphasise that word—three different forms on 24,000 new pensioners. My right hon. Friend has already spoken in some detail about the trial. The trial—I stress that it is only a trial—is merely to test the impact of the different methods of presentation. The aim is to provide information about the advantages to customers of the ACT option, which are not yet widely understood, and to encourage take-up of that method on a voluntary basis.
Some hon. Members have today expressed their concern about the way in which the payment options have been presented in some of the trial forms. Let me therefore add a word of reassurance that the Benefits Agency, which is responsible for the administration of benefits, will take full account of hon. Members' comments on that point.
First, our commitment to a nationwide network is not negotiable, whether the Post Office's future lies in the public or private sector. Secondly, there is no link whatever between the encouragement of ACT and our review of the structure and organisation of the Post Office. Thirdly, our policy is to encourage ACT. That policy will not endanger the nationwide network, including the rural network. I say to the hon. Members for Antrim, North and for Sheffield, Heeley (Mr. Michie) that we will continue to give pensioners a choice in how their pensions are paid.
The hon. Member for Newcastle- upon Tyne, Central raised questions about the Post Office review. I can assure hon. Members that the review is being undertaken with no preconceptions as to its outcome and it is looking at both private and public sector options. It is Labour Members who are frightened of ideas. All new ideas in their hands have turned out to be vote losers.
The Opposition have suggested today that there is a link between privatisation of the Post Office, encouragement of ACT, and post office closures. I find it hard to follow their argument. lf, as they claim, we are trying to fatten up the Post Office for privatisation, why should we wish to encourage ACT at all? Surely, if fattening up the Post Office was our intention, we would be trying to minimise ACT payments so that the Post Office would get more and more of that work. If we were seeking only to maximise the Post Office's profits in preparation for privatisation, why should we be making repeated assurances about maintaining the nationwide network, including the rural offices which are the least profitable?
I say to the hon. Member for Liverpool, Garston (Mr. Loyden) that we have an open mind on privatisation. Opposition Members have a closed mind. We look at private and public sector options. Opposition Members consider only public sector options. Of course, the Labour party predicted disaster for customer services before every privatisation. "No privatised company would ever bother looking after the customer," the Labour party said. "All that it would be interested in would be profits." Labour got it wrong in every privatisation. We have only to look at British Telecom and the investment that has gone into the network to know that.
The Labour party's refusal even to consider the benefits that privatisation might bring the Post Office is an indication of a deeper malaise in the Labour party. Labour Members have a dinosaur-like conservatism which would allow the Post Office to ossify—shackled by unavoidable public sector constraints, unable to compete effectively in a changing world. They would condemn the Post Office to a slow decline, as they would have condemned all the other nationalised industries. Of course, they have opposed every nationalisation.
We have heard a lot of nonsense today about ACT. It was a Labour Minister, the right hon. Member for Salford, East (Mr. Orme), who, about 15 years ago—perhaps he will listen to this—said:
I am expecting a report by the end of the month … I am in favour of the principle"—
of payment direct into pensioners' bank accounts—
and the introduction of such an arrangement would cover child benefit as well as retirement pensions … I hope to make some progress in the near future."—[Official Report, 6 March 1979; Vol. 963, c. 1078]

Mr. Michael Lord: Will my hon. Friend give way?

Mr. Leigh: No, I must finish my remarks.
That was a Labour Minister about 15 years ago, saying that he would welcome progress to ACT.
I say to the hon. Member for Newcastle upon Tyne, Central that I am surprised that he has not protested that his constituents are charged by the Labour council when they pay their council tax at their post offices. In central Newcastle, the council expects—it even demands of—people to pay the council tax at the local housing office, and if it is paid at a post office a charge is made. What kind of choice is that in Labour's heartland?

Mr. Cousins: Will the Minister give way?

Mr. Leigh: No; the hon. Gentleman has had his chance.
Labour's scaremongering about the Post Office was as wrong 10 years ago as it is today. It was wrong at the time of the privatisation of British Telecom, and wrong on

every other privatisation. Labour was wrong yesterday, is wrong today and no doubt will be wrong tomorrow. Labour says that it is opposed to closures, but it has closed more post offices than we ever did. Labour says that it favours a national network of post offices, yet ours is the only party that is committed to it. Labour says that it favours investment, yet it has opposed any discussion of the options that would result in private investment to improve the service.
Labour says that it cares about pensioners. Why does it indulge in scaremongering? Labour says that it favours choice. Why does it deride our commitment to choice? We will give new opportunities to our small post offices. They will be allowed to compete for national lottery work and we will consider giving them further opportunities in financial services, bill payments and ticket sales. Other interesting ideas have been raised and considered in the course of our review, all of which Labour has opposed.
We have raised the standard for choice, investment and free enterprise. The existence of all 19,000 privately run sub-post offices is a tribute to the spirit of entrepreneurship which we wish to foster and which the Opposition despise. We want those businesses to grow and expand—to be providers of valued services in villages and towns—and we will continue to offer them that opportunity. We will continue to offer all our pensioners the right to choose between the bank and the post office for payment of their pensions.
That is our commitment—to choice, to investment and to the Post Office. I urge my hon. Friends to reject this absurd motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 275, Noes 311.

Division No. 275]
[7.00 pm


AYES


Abbott, Ms Diane
Callaghan, Jim


Adams, Mrs Irene
Campbell, Mrs Anne (C'bridge)


Ainger, Nick
Campbell, Menzies (Fife NE)


Ainsworth, Robert (Cov'try NE)
Campbell, Ronnie (Blyth V)


Allen, Graham
Campbell-Savours, D. N.


Alton, David
Canavan, Dennis


Anderson, Ms Janet (Ros'dale)
Cann, Jamie


Armstrong, Hilary
Carlile, Alexander (Montgomry)


Ashdown, Rt Hon Paddy
Chisholm, Malcolm


Ashton, Joe
Clapham, Michael


Austin-Walker, John
Clark, Dr David (South Shields)


Banks, Tony (Newham NW)
Clarke, Eric (Midlothian)


Barnes, Harry
Clarke, Tom (Monklands W)


Barron, Kevin
Clelland, David


Battle, John
Clwyd, Mrs Ann


Bayley, Hugh
Coffey, Ann


Beckett, Rt Hon Margaret
Cohen, Harry


Benn, Rt Hon Tony
Connarty, Michael


Bennett, Andrew F.
Cook, Frank (Stockton N)


Benton, Joe
Cook, Robin (Livingston)


Bermingham, Gerald
Corbett, Robin


Berry, Dr. Roger
Corbyn, Jeremy


Berts, Clive
Corston, Ms Jean


Blair, Tony
Cousins, Jim


Blunkett, David
Cryer, Bob


Boyce, Jimmy
Cummings, John


Boyes, Roland
Cunliffe,. Lawrence


Bradley, Keith
Cunningham, Jim (Covy SE)


Bray, Dr Jeremy
Cunningham, Rt Hon Dr John


Brown, Gordon (Dunfermline E)
Dafis, Cynog


Brown, N. (N'c'tle upon Tyne E)
Darling, Alistair


Bruce, Malcolm (Gordon)
Davidson, Ian


Burden, Richard
Davies, Bryan (Oldham C'tral)


Byers, Stephen
Davies, Rt Hon Denzil (Llanelli)


Caborn, Richard
Davies, Ron (Caerphilly)






Davis, Terry (B'ham, H'dge H'l)
Kennedy, Jane (Lpool Brdgn)


Denham, John
Khabra, Piara S.


Dewar, Donald
Kinnock, Rt Hon Neil (Islwyn)


Dixon, Don
Kirkwood, Archy


Dobson, Frank
Leighton, Ron


Donohoe, Brian H.
Lestor, Joan (Eccles)


Dowd, Jim
Lewis, Terry


Dunnachie, Jimmy
Litherland, Robert


Dunwoody, Mrs Gwyneth
Livingstone, Ken


Eagle, Ms Angela
Lloyd, Tony (Stretford)


Eastham, Ken
Llwyd, Elfyn


Enright, Derek
Loyden, Eddie


Etherington, Bill
Lynne, Ms Liz


Evans, John (St Helens N)
McAllion, John


Ewing, Mrs Margaret
McAvoy, Thomas


Fatchett, Derek
McCartney, Ian


Faulds, Andrew
Macdonald, Calum


Field, Frank (Birkenhead)
McFall, John


Fisher, Mark
McKelvey, William


Flynn, Paul
McLeish, Henry


Foster, Rt Hon Derek
McWilliam, John


Foster, Don (Bath)
Madden, Max


Foulkes, George
Mahon, Alice


Fraser, John
Maitland, Lady Olga


Fyfe, Maria
Mandelson, Peter


Gapes, Mike
Marek, Dr John


Garrett, John
Marshall, David (Shettleston)


George, Bruce
Marshall, Jim (Leicester, S)


Gerrard, Neil
Martin, Michael J. (Springburn)


Gilbert, Rt Hon Dr John
Martlew, Eric


Godman, Dr Norman A.
Maxton, John


Godsiff, Roger
Meacher, Michael


Golding, Mrs Llin
Meale, Alan


Gordon, Mildred
Michael, Alun


Gould, Bryan
Michie, Bill (Sheffield Heeley)


Graham, Thomas
Michie, Mrs Ray (Argyll Bute)


Grant, Bernie (Tottenham)
Milburn, Alan


Griffiths, Nigel (Edinburgh S)
Miller, Andrew


Griffiths, Win (Bridgend)
Moonie, Dr Lewis


Grocott, Bruce
Morgan, Rhodri


Gunnell, John
Morley, Elliot


Hain, Peter
Morris, Rt Hon A. (Wy'nshawe)


Hall. Mike
Morris, Estelle (B'ham Yardley)


Hanson, David
Morris, Rt Hon J. (Aberavon)


Hardy, Peter
Mowlam, Marjorie


Harman, Ms Harriet
Mudie, George


Harvey, Nick
Murphy, Paul


Hattersley, Rt Hon Roy
Oakes, Rt Hon Gordon


Henderson, Doug
O'Brien, William (Normanton)


Heppell, John
O'Hara, Edward


Hill, Keith (Streatham)
Olner, William


Hinchliffe, David
O'Neill, Martin


Hoey, Kate
Orme, Rt Hon Stanley


Hogg, Norman (Cumbernauld)
Paisley, Rev Ian


Home Robertson, John
Parry, Robert


Hood, Jimmy
Patchett, Terry


Hoon, Geoffrey
Pendry, Tom


Howarth, George (Knowsley N)
Pickthall, Colin


Howells, Dr. Kim (Pontypridd)
Pike, Peter L.


Hoyle, Doug
Pope, Greg


Hughes, Kevin (Doncaster N)
Powell, Ray (Ogmore)


Hughes, Robert (Aberdeen N)
Prentice, Ms Bridget (Lew'm E)


Hughes, Roy (Newport E)
Prentice, Gordon (Pendle)


Hughes, Simon (Southwark)
Prescott, John


Hutton, John
Primarolo, Dawn


Illsley, Eric
Purchase, Ken


Ingram, Adam
Quin, Ms Joyce


Jackson, Glenda (H'stead)
Radice, Giles


Jackson, Helen (Shef'ld, H)
Randall, Stuart


Jamieson, David
Raynsford, Nick


Janner, Greville
Redmond, Martin


Jones, Barry (Alyn and D'side)
Reid, Dr John


Jones, Ieuan Wyn (Ynys Môn)
Rendel, David


Jones, Jon Owen (Cardiff C)
Richardson, Jo


Jones, Lynne (B'ham S O)
Robertson, George (Hamilton)


Jones, Martyn (Clwyd, SW)
Robinson, Geoffrey (Co'try NW)


Jones, Nigel (Cheltenham)
Rogers, Allan


Jowell, Tessa
Rooker, Jeff


Kaufman, Rt Hon Gerald
Rooney, Terry


Keen, Alan
Ross, Ernie (Dundee W)





Rowlands, Ted
Taylor, Matthew (Truro)


Ruddock, Joan
Tipping, Paddy


Salmond, Alex
Trimble, David


Sedgemore, Brian
Turner, Dennis


Sheerman, Barry
Tyler, Paul


Sheldon, Rt Hon Robert
Vaz, Keith


Shore, Rt Hon Peter
Walker, Rt Hon Sir Harold


Short, Clare
Wardell, Gareth (Gower)


Simpson, Alan
Wareing, Robert N


Skinner, Dennis
Watson, Mike


Smith, Andrew (Oxford E)
Wicks, Malcolm


Smith, C. (Isl'ton S & F'sbury)
Wigley, Dafydd


Smith, Rt Hon John (M'kl'ds E)
Williams, Rt Hon Alan (Sw'n W)


Smith, Llew (Blaenau Gwent)
Williams, Alan W (Carmarthen)


Snape, Peter
Wilson, Brian


Soley, Clive
Winnick, David


Spearing, Nigel
Wise, Audrey


Spellar, John
Worthington, Tony


Steel, Rt Hon Sir David
Wray, Jimmy


Steinberg, Gerry
Wright, Dr Tony


Stevenson, George
Young, David (Bolton SE)


Stott, Roger



Strang, Dr. Gavin
Tellers for the Ayes:


Straw, Jack
Mr. Peter Kilfoyle and


Taylor, Mrs Ann (Dewsbury)
Mr. Gordon McMaster.




NOES


Ainsworth, Peter (East Surrey)
Channon, Rt Hon Paul


Aitken, Jonathan
Churchill, Mr


Alexander, Richard
Clappison, James


Alison, Rt Hon Michael (Selby)
Clarke, Rt Hon Kenneth (Ruclif)


Allason, Rupert (Torbay)
Clifton-Brown, Geoffrey.


Amess, David
Coe, Sebastian


Ancram, Michael
Colvin, Michael


Arbuthnot, James
Congdon, David


Arnold. Jacques (Gravesham)
Conway, Derek


Arnold, Sir Thomas (Hazel Grv)
Coombs, Simon (Swindon)


Ashby, David
Cope, Rt Hon Sir John


Aspinwall, Jack
Cormack, Patrick


Atkinson, David (Bour'mouth E)
Couchman, James


Atkinson, Peter (Hexham)
Cran, James


Baker, Rt Hon K. (Mole Valley)
Currie, Mrs Edwina (S D'by'ire)


Baker, Nicholas (Dorset North)
Curry, David (Skipton & Ripon)


Baldry, Tony
Davies, Quentin (Stamford)


Banks, Matthew (Southport)
Davis, David (Boothferry)


Banks, Robert (Harrogate)
Day, Stephen


Bates, Michael
Deva, Nirj Joseph


Batiste, Spencer
Devlin, Tim


Bellingham, Henry
Dickens, Geoffrey


Bendall, Vivian
Dicks, Terry


Beresford, Sir Paul
Dorrell, Stephen


Biffen, Rt Hon John
Douglas-Hamilton, Lord James


Blackburn, Dr John G.
Dover, Den


Body, Sir Richard
Duncan, Alan


Bonsor, Sir Nicholas
Duncan-Smith, Iain


Booth, Hartley
Dunn, Bob


Boswell, Tim
Durant, Sir Anthony


Bottomley, Peter (Eltham)
Dykes, Hugh


Bottomley, Rt Hon Virginia
Eggar, Tim


Bowden, Andrew
Elletson, Harold


Bowis, John
Emery, Rt Hon Sir Peter


Boyson, Rt Hon Sir Rhodes
Evans, David (Welwyn Hatfield)


Brandreth, Gyles
Evans, Jonathan (Brecon)


Brazier, Julian
Evans, Nigel (Ribble Valley)


Bright, Graham
Evans, Roger (Monmouth)


Brooke, Rt Hon Peter
Evennett, David


Brown, M. (Brigg & Cl'thorpes)
Faber, David


Browning, Mrs. Angela
Fabricant, Michael


Bruce, Ian (S Dorset)
Fenner, Dame Peggy


Budgen, Nicholas
Field, Barry (Isle of Wight)


Burns, Simon
Fishburn, Dudley


Burt, Alistair
Forman, Nigel


Butcher, John
Forsyth, Michael (Stirling)


Butler, Peter
Fowler, Rt Hon Sir Norman


Butterfill, John
Fox, Dr Liam (Woodspring)


Carlisle, John (Luton North)
Fox, Sir Marcus (Shipley)


Carlisle, Kenneth (Lincoln)
Freeman, Roger


Carrington, Matthew
French, Douglas


Carttiss, Michael
Fry, Peter


Cash, William
Gale, Roger






Gallie, Phil
Lamont, Rt Hon Norman


Gardiner, Sir George
Lang, Rt Hon Ian


Garel-Jones, Rt Hon Tristan
Legg, Barry


Garnier, Edward
Leigh, Edward


Gill, Christopher
Lennox-Boyd, Mark


Gillan, Cheryl
Lester, Jim (Broxtowe)


Goodlad, Rt Hon Alastair
Lidington, David


Goodson-Wickes, Dr Charles
Lilley, Rt Hon Peter


Gorman, Mrs Teresa
Lloyd, Peter (Fareham)


Gorst, John
Lord, Michael


Grant, Sir Anthony (Cambs SW)
Luff, Peter


Greenway, Harry (Ealing N)
Lyell, Rt Hon Sir Nicholas


Griffiths, Peter (Portsmouth, N)
MacGregor, Rt Hon John


Grylls, Sir Michael
MacKay, Andrew


Gummer, Rt Hon John Selwyn
Maclean, David


Hague, William
McLoughlin, Patrick


Hamilton, Rt Hon Archie (Epsom)
McNair-Wilson, Sir Patrick


Hamilton, Neil (Tatton)
Madel, David


Hampson, Dr Keith
Maitland, Lady Olga


Hanley, Jeremy
Major, Rt Hon John


Hannam, Sir John
Malone, Gerald


Hargreaves, Andrew
Mans, Keith


Harris, David
Marland, Paul


Haselhurst, Alan
Marlow, Tony


Hawkins, Nick
Marshall, John (Hendon S)


Hawksley, Warren
Martin, David (Portsmouth S)


Hayes, Jerry
Mates, Michael


Heald, Oliver
Mawhinney, Dr Brian


Heathcoat-Amory, David
Mayhew, Rt Hon Sir Patrick


Hendry, Charles
Mellor, Rt Hon David


Heseltine, Rt Hon Michael
Merchant, Piers


Hicks, Robert
Milligan, Stephen


Higgins, Rt Hon Sir Terence L.
Mills, Iain


Hill, James (Southampton Test)
Mitchell, Andrew (Gedling)


Horam, John
Mitchell, Sir David (Hants NW)


Hordern, Rt Hon Sir Peter
Moate, Sir Roger


Howard, Rt Hon Michael
Monro, Sir Hector


Howarth, Alan (Strat'rd-on-A)
Montgomery, Sir Fergus


Howell, Rt Hon David (G'dford)
Moss, Malcolm


Howell, Ralph (North Norfolk)
Needham, Richard


Hughes Robert G. (Harrow W)
Nelson, Anthony


Hunt, Rt Hon David (Wirral W)
Neubert, Sir Michael


Hunt, Sir John (Ravensbourne)
Newton, Rt Hon Tony


Hunter, Andrew
Nicholls, Patrick


Jack, Michael
Nicholson, David (Taunton)


Jackson, Robert (Wantage)
Nicholson, Emma (Devon West)


Jenkin, Bernard
Norris, Steve


Jessel, Toby
Onslow, Rt Hon Sir Cranley


Johnson Smith, Sir Geoffrey
Oppenheim, Phillip


Jones, Gwilym (Cardiff N)
Ottaway, Richard


Jones, Robert B. (W Hertfdshr)
Page, Richard


Jopling, Rt Hon Michael
Paice, James


Kellett-Bowman, Dame Elaine
Patnick, Irvine


Key, Robert
Patten, Rt Hon John


King, Rt Hon Torn
Pattie, Rt Hon Sir Geoffrey


Kirkhope, Timothy
Pawsey, James


Knapman, Roger
Peacock, Mrs Elizabeth


Knight, Mrs Angela (Erewash)
Pickles, Eric


Knight, Greg (Derby N)
Porter, Barry (Wirral S)


Knox, David
Porter, David (Waveney)


Kynoch, George (Kincardine)
Portillo, Rt Hon Michael


Lait, Mrs Jacqui
Powell, William (Corby)





Redwood, John
Taylor, Ian (Esher)


Renton, Rt Hon Tim
Taylor, John M. (Solihull)


Richards, Rod
Taylor, Sir Teddy (Southend, E)


Riddick, Graham
Temple-Morris, Peter


Robathan, Andrew
Thomason, Roy


Roberts, Rt Hon Sir Wyn
Thompson, Sir Donald (C'er V)


Robertson, Raymond (Ab'd'n S)
Thompson, Patrick (Norwich N)


Robinson, Mark (Somerton)
Thornton, Sir Malcolm


Roe, Mrs Marion (Broxbourne)
Thurnham, Peter


Rowe, Andrew (Mid Kent)
Townend, John (Bridlington)


Rumbold, Rt Hon Dame Angela
Townsend, Cyril D. (Bexl'yh'th)


Ryder, Rt Hon Richard
Tracey, Richard


Sackville, Tom
Tredinnick, David


Sainsbury, Rt Hon Tim
Trend, Michael


Scott, Rt Hon Nicholas
Trotter, Neville


Shaw, David (Dover)
Twinn, Dr Ian


Shaw, Sir Giles (Pudsey)
Vaughan, Sir Gerard


Shephard, Rt Hon Gillian
Viggers, Peter


Shepherd, Colin (Hereford)
Waldegrave, Rt Hon William


Shepherd, Richard (Aldridge)
Walden, George


Shersby, Michael
Walker, Bill (N Tayside)


Sims, Roger
Waller, Gary


Skeet, Sir Trevor
Wardle, Charles (Bexhill)


Smith, Sir Dudley (Warwick)
Waterson, Nigel


Smith, Tim (Beaconsfield)
Watts, John


Soames, Nicholas
Wells, Bowen


Spencer, Sir Derek
Wheeler, Rt Hon Sir John


Spicer, Sir James (W Dorset)
Whitney, Ray


Spicer, Michael (S Worcs)
Whittingdale, John


Spink, Dr Robert
Widdecombe, Ann


Spring, Richard
Wiggin, Sir Jerry


Sproat, Iain
Wilkinson, John


Squire, Robin (Hornchurch)
Willetts, David


Stanley, Rt Hon Sir John
Winterton, Mrs Ann (Congleton)


Steen, Anthony
Winterton, Nicholas (Macc'f'ld)


Stephen, Michael
Wolfson, Mark


Stern, Michael
Wood, Timothy


Stewart, Allan
Yeo, Tim


Streeter, Gary
Young, Sir George (Acton)


Sumberg, David



Sweeney, Walter
Tellers for the Noes:


Sykes, John
Mr. David Lightbown and


Tapsell, Sir Peter
Mr. Sydney Chapman.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

Mr. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House endorses Her Majesty's Government's clear commitment to freedom of choice in the means by which social security benefits are paid, while reducing fraud and unnecessary costs by extending the availability of Automated Credit Transfer to all benefits and encouraging people with bank accounts to choose to have benefits paid into their accounts, to the continuation of a national network of post offices and sub-post offices and to securing the efficient and effective delivery of the vital service which the Post Office provides.

Defence Industrial Base

Mr. Deputy Speaker (Mr. Michael Morris): Madam Speaker has selected the amendment standing in the name of the Prime Minister.

Dr. David Clark: I beg to move,
That this House recognises with gratitude the efforts and skills over the years of all workers in the defence industries who have ensured that the United Kingdom's security has been maintained with the best of equipment and weapons; notes that with its laissez faire approach to the reduction in defence orders, Her Majesty's Government now threatens the long term viability of Britain's defence industry; regrets that the Government is now treating defence workers in a callous and cavalier manner, as has been most recently witnessed in the case of Swan Hunter on Tyneside; and calls upon the Government to ensure an adequate package of measures to attract investment and employment to those areas adversely affected and to establish a Defence Diversification Agency as part of a strategy of harnessing all the available skills for the national manufacturing effort.
The Labour party felt that it was necessary to call this debate in time allocated to us, in view of the Government's failure to allow a debate on defence. As the House knows, it has long been a convention that two days each year are allocated to discuss the defence estimates, which permits hon. and right hon. Members to raise a wide variety of issues affecting the defence of Britain. However, the Government have resolutely refused to arrange such a debate, despite repeated requests from Labour Members. One must go back to 1991 to find the previous opportunity for the House to have a general debate on defence.
We all know why the Government have failed to arrange a debate—it is simply that they are in such a mess on defence and dare not face the exposure of their inadequacies in this field. The crisis management approach, which is inevitable once' they abandoned the strategy in favour of expediency, has been widely criticised throughout the defence and security field.
The Labour party has made its position clear. At the last general election, our manifesto said that we would
provide whatever resources are needed for effective defence for our country".
That is clear—there is no hesitation, no calculation and no equivocation.

Mr. David Sumberg: How does the hon. Gentleman square that statement with the commitment made at the Labour party conference for £6 billion-worth of cuts and the commitment of the hon. Member for Livingston (Mr. Cook) to reduce expenditure to the western European average? Such policies would decimate the defence industry in the United Kingdom, kill jobs in and around my constituency and be an absolute disaster for the industries which the hon. Gentleman says he represents.

Mr. Clark: I had intended to speak only briefly today, but, in view of the hon. Member's inane intervention, I will not do so. Let me take it clear where the Labour party stands. We will provide whatever resources are needed for the effective defence of our country. I hope that Conservative Members can understand that.

Mr. Rod Richards: rose—

Mr. Clark: I will not give way, because it will be an inane comment.
When we speak of "whatever resources", we are conscious that it is not sufficient merely to count the number of our armed forces. One must take into account the resources and equipment available to our troops. Those resources and equipment have been among the best in the world, and have been largely produced in British factories. The skill and commmitment have been absolute. One has only to visit our defence factories to appreciate the pride and dedication of the workers. The House and the nation owe a debt of gratitude to our workers in the defence industries.
With the break-up of the Soviet Union and the disappearance of the Warsaw pact, almost every country in the western world has reduced, or plans to reduce, its defence spending—that is natural—and this Government have been no exception. Even before the round of defence cuts which are currently being planned, Her Majesty's Government have announced cuts of up to 20 per cent. by 1995–96 and a projected further 9 per cent. thereafter.
The Opposition do not quibble with reducing defence spending. We quibble only about how the Government have arrived at their decisions without a defence review. How have they determined to implement the cuts, sweeping aside all moral, social and strategic consequences affecting all those involved in our defence industry?
Since 1990, more than 100,000 workers in defence-related industries have lost their jobs. Men and women who have given years of service have found themselves suddenly dumped on the scrap heap. With their sole reliance on market forces, Her Majesty's Government have not only acted unfairly but put at risk the ability of Britain to supply our own defence needs in the future.
In essence, the Government have taken a laissez-faire approach to the future of our defence industries. Whatever is cheapest in the short run is preferred and damn the consequences. Their strategy towards the defence industry of Britain is little more than industrial Darwinism. Whatever emerges from the free market must be correct and they will worry about tomorrow when the day comes. As a nation, we shall rue the consequences of that policy.

Mr. Richards: Will the hon. Gentleman tell the House and the country which shipyard would have been given the landing platform helicopter contract if he had been Secretary of State for Defence?

Dr. Clark: The hon. Gentleman has asked a fair question. I shall answer the question because it deserves an answer. Given a difference of £70 million in an order of £210 million, there was no choice but to give the order to Barrow and Govan. I hope that that is sufficiently plain and straight for the hon. Gentleman. I shall deal with the point further later.

Mr. David Ashby: Will the hon. Gentleman give way?

Dr. Clark: No. I want to make progress, not deal with some fatuous point.
By their position as monopoly buyer, the Government have weakened the industrial base of Britain. That is extremely dangerous. As Gerald Boxall, chairman of Vickers, recently argued crudely:
You can't go to war without an industrial base.
John Weston, the managing director of British Aerospace—one of Britain's largest companies—put it more diplomatically when describing the defence industrial base. He rightly claimed that it was


part of the essential make-up of the country's defence posture.
Both were right in their own way.
Nowhere has the problem been seen more clearly than in the case of Swan Hunter on Tyneside, a shipbuilding company with a long tradition of building fine ships which have met the exacting standards of the Royal Navy. There was no mention of its sterling work in the Falklands conflict, when the men worked night and day to ensure that the ships were prepared for the conflict.
Last week, events occurred at Swan Hunter which no one has been able to explain satisfactorily. On the day that it was announced that the helicopter landing ship was to be built at Govan and Barrow, the Evening Chronicle in Newcastle ran a dramatic story, supplied by the hon. Member for Tynemouth (Mr. Trotter), under the banner headline on the front page "Victory", that the ship was to go to Swan Hunter.
Given the Government's view that the Royal Navy should have fewer than 40 surface ships, the hon. Member for Tynemouth cannot have realised that the Government had decided that Swan Hunter was expendable.

Mr. Peter Atkinson: The hon. Gentleman does my hon. Friend the Member for Tynemouth (Mr. Trotter) a great disservice. I can confirm that, between half-past 1 and half-past 2 on that day, which I spent in the company of my hon. Friend, he did not know the outcome of the Ministry of Defence decision. So to blame him for floating that story is utterly unworthy and unfair. The hon. Gentleman should withdraw the accusation.

Dr. Clark: I agree with the hon. Gentleman's point. He is right. The hon. Member for Tynemouth did not know what the position was. He would not have made any comments to the press along those lines if he had known.

Mr. Neville Trotter: It is good of my hon. Friend to explain what happened on that day. He and I had lunch together. I was riot aware of the outcome of the decision on the order. I did not advise the Evening Chronicle in the way that it reported. What the hon. Gentleman said is not true. I appreciate that he said it on the basis of an inaccurate account in a newspaper. The truth is as explained by my hon. Friend the Member for Hexham (Mr. Atkinson).

Dr. Clark: I gave way to the hon. Gentleman because, as I notified him, I mentioned him in my speech. I do not suggest for one moment that he knew the outcome. Of course he did not know. That adds to the mystery of the events surrounding the whole tendering process. That is the point that I want to raise tonight.
In view of the background, several pertinent questions need to be answered about the events surrounding the affair. I see that the hon. Member for Tynemouth agrees with me on that point. Those questions can be answered only by an independent inquiry. I am glad that the Defence Select Committee shares my view, and I am delighted that the National Audit Office is now to investigate.

Mr. Tim Devlin: Will the hon. Gentleman give way?

Dr. Clark: I have made it clear that I wish to complete my speech as quickly as possible.
Many questions arise. How is it that two bids were different to the tune of £70 million out of an order of £210 million? That stretches the imagination. Were the two

companies bidding for precisely the same ship? I understand from the hon. Member for Tynemouth, through the north-eastern newspapers, that, in a meeting with him, the Controller the Navy, Admiral Sir Kenneth Eaton, confirmed that the companies were bidding for the same ship.
If Swan Hunter goes under, how will that affect the Government's procurement policy? There will be no warship building yards in Britain capable of building anything larger than a frigate, with the possible exception of Vickers Shipbuilding and Engineering Ltd. in Barrow, and that only if massive investment in slipways and cranage was undertaken there.

Mr. Trotter: I noted what the controller said when I asked him about the matter. He said:
They were two good designs and either was acceptable to the Navy.
He categorically denied that there was anything wrong in the process by which the decision was taken.

Dr. Clark: I am grateful for that intervention. However, to say that either design was acceptable to the Royal Navy is not the same as saying both yards bid for the same type of ship. That is the essence of one of the questions to which we need the answer.
If we have no large warship building capacity, with the possible exception of VSEL, where will our future large naval ships be built? Will they be built in foreign yards? Will they be built in South Korea? Will VSEL be given the monopoly for large ships as well as for submarines? If that is the case, how does the Government's competition policy operate? Furthermore, have the Government no concern about the prospect in strategic terms of not retaining some capacity for large warship building?
Opposition Members believe that we need an answer to such questions. We need an inquiry, not to reopen the bid but to ensure that no mistakes which may or may not have occurred in the tendering procedure are repeated.

Mr. Richards: Will the hon. Gentleman give way?

Mr. Gary Streeter: Will the hon. Gentleman give way?

Dr. Clark: No. I must continue.
There is too much at stake for any mistakes to be repeated. Not only the livelihood of men and women is at stake but the long-term ability of Britain to defend itself.

Mr. Streeter: Will the hon. Gentleman give way?

Dr. Clark: I must make progress. I am sorry, but I must continue.
Until such an inquiry has reported, many will believe that Her Majesty's Government deliberately and callously set out to deceive all those at Swan Hunter, including the hon. Member for Tynemouth, into believing that it was favourite to win the order when clearly, with an overbid of £70 million, it was never a runner. It is difficult to come to any conclusion other than that the Government had it in for Swan Hunter. How otherwise can one explain a local newspaper headline claiming victory? How otherwise can one explain the Prime Minister's being given credit for the order by none other than the hon. Member for Tynemouth (Mr. Trotter)?

Mr. Michael Bates: Will the hon. Member give way?

Dr. Clark: No.
Labour believes that we must have more planning in this respect—flexible and viable planning, but nonetheless with a strategy. Like Her Majesty's Government, we have accepted that the amount we spend on defence in the years to come is likely to be reduced. Thereafter, we depart from the Government's approach.

Mr. Devlin: Will the hon. Gentleman give way?

Dr. Clark: No.

Mr. Devlin: It is a very good point.

Dr. Clark: If it were a very good point, it would be unique for the hon. Gentleman.
The Government must show in a tangible manner that they are prepared to provide financial assistance for areas affected by defence industry closures and rundown. The Tyneside offer, for example, is a mere fleabite, bearing in mind the enormity of the problem involved. In south Tyneside, where about 40 per cent. of the work force of Swan Hunter live, there is already male unemployment, according to the Government's own figures, of more than 28 per cent. That does not take into account the 1,100 miners at Westoe colliery, where work stopped just 10 days ago.
We are talking about male unemployment of more than 33 per cent. in a big borough—not a small town—of 150,000 people. That will be the effect. I realise that Conservative Members are not interested in unemployment, especially in the north-east of England. I am dealing with figures not for wards or for towns but for a large travel-to-work area. [Interruption.] Hon. Members may cackle, but the people of this country will agree that an unemployment rate of one in three is unforgivable and that the Government must do something about it.

Mr. Bates: Will the hon. Gentleman give way?

Dr. Clark: As the hon. Gentleman represents a seat in the north-east, I am sorry to say that I cannot give way.
Even the European Community recognises that former defence industry areas may have a problem. Indeed, its own KONVER fund is available. Can the Government give the House an assurance tonight that Britain will avail itself fully of this programme? Will areas such as Tyneside, which are outside the scheme, be brought within it?
I am trying to get across to Ministers a point that they have not yet taken—that we are talking about a situation in which one in three men are out of work. This is not short-term unemployment, but massive long-term unemployment.

Mr. Bates: The hon. Gentleman seems to be basing his defence policy on the Evening Chronicle. Given Labour's policy, that is a fairly credible base. Nobody doubts for one minute that unemployment is a tragedy. The hon. Gentleman himself has just said to the House that, given the same criteria and the same bids, he would have made the same decision. That being the case, what does he propose?

Dr. Clark: We need answers to a number of questions about the whole process of tendering. I cannot say what I would have done if I had been the Secretary of State for Defence. Quite clearly there is not available to me anything like as much information as is available to the Government. I shall not bore the House. Surely hon.

Members are not so stupid as to fail to understand that the Government have tens of thousands of civil servants, including some of the top contract lawyers in the country, helping them to evaluate contracts.

Several hon. Members: rose—

Mr. Frank Cook: On a point of order, Mr. Deputy Speaker. Like you, Sir, I am well aware of the fact that a standard defence tactic is the firing of chaff in the event of illumination by enemy fire. Is it in order for Conservative Members to use debating chaff to disrupt the development of a genuine theme by the Opposition spokesman? Will you please enable my hon. Friend to speak without interruption so that we may understand the logic, even if Conservative Members are incapable of understanding it?

Mr. Deputy Speaker (Mr. Michael Morris): I was in the Royal Air Force, and it seems to me that the Opposition spokesman is a pathfinder. [Interruption.] The hon. Member, having intervened at least once—perhaps twice —should realise that the hon. Gentleman is not giving way to him.

Dr. Clark: If this is the best that Conservative Members can produce, it will not be very difficult to handle. The Government must take seriously the need to aid areas that are suffering from massive unemployment. These problems will not go away. Labour Members believe that the Government should be more pre-emptive.
It is our belief that Britain needs a defence diversification agency—a body that would ensure that companies in the defence field were assisted with defence conversion work and, where appropriate, helped to diversify into other markets, products and technologies. We accept that this is not an easy remit, but it is one that is worth pursuing.
In spite of attempts by the Government to ridicule the idea, other countries are now adopting this approach. This applies to France, Germany and, most recently of all, the United States of America. Even that high apostle of the free market is not so obsessed as are the Government and Conservative MPs with the free market that is prepared to sacrifice its own indigenous defence industry and the skills of its workers for some short-term financial gain, which will probably cost dear in the long run. Congress has allocated billions of dollars for defence diversification and for the use of dual technology. There is no doubt that the Administration in the United States are aware of the problem and of the challenge. Unlike the British Government, they are prepared to face up to the challenge.
Defence diversification is a runner even at the moment. There is defence diversification in this country. Companies are already involved in the process.

Mr. Keith Mans: Will the hon. Gentleman give way?

Dr. Clark: I should like to give way, but I must make some progress.
In Devonport, I saw luxury yachts being built. In Rosyth, I saw London underground trains being refurbished. In Southampton, Vosper Thorneycroft is working on fireproofing techniques for North sea oil platforms. This is admirable. In Weymouth, Ferranti Thompson has adapted its sonar work for seal scaring in Scottish fish farms. Swan Hunter itself has diversified. It


was building the new Tyne ferry and various pontoons. In addition, it had an order book of more than £5 million in general engineering. Firms have diversified.
Furthermore, many local authorities and trade unions, unlike the Government, have accepted the challenge of defence diversification. Much work is being done up and down the country. All this is being achieved despite lack of encouragement from the Government—indeed, at times, despite their discouragement. Imagine what could be achieved if there were an enabling hand.
The innovative skills of the defence industry could be harnessed in the civilian field as well as the military field. There are many opportunities to create dual technologies. If we were to pursue this path, the manufacturing decline that we have seen for the past 14 years might well be reversed. The Government owe it to the defence workers and the country at large to ensure that that happens.

The Minister of State for Defence Procurement (Mr. Jonathan Aitken): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'recognises with gratitude the efforts and skills over the years of all workers in the defence industries who have ensured that the United Kingdom's security has been maintained with the best of equipment and weapons; notes that the policy of competition for defence orders adopted by Her Majesty's Government has resulted in an efficient United Kingdom defence industry with world-class export performance; condemns the 25 per cent. defence cuts demanded by the Labour Party Conference which would cripple Britain's armed forces and her defence industry; rejects the idea of a Defence Diversification Agency to second-guess business decisions that should more properly be taken by companies; but welcomes the assistance provided by Her Majesty's Government to help regions to adjust more effectively to major industrial change by creating opportunities for new industries, as exemplified by the wide-ranging package of measures announced last week for Tyneside.'.
The House has just listened to a wildly intemperate and inaccurate speech. As I listened to the feeble attempt of the hon. Member for South Shields (Dr. Clark) to become a rabble rouser for the evening, the words of a famous Labour party icon came into my head. They were used by the great and late Nye Bevan, who once opened a debate in the House by saying that he welcomed the opportunity to prick the bloated bladder of lies with a poniard of truth. That is exactly what I am going to do this evening.
I shall not stray out of order and accuse the hon. Gentleman of outright mendacity, but I have seldom heard a more unconvincing mish-mash of half truths, misrepresentations and fantasies from the Evening Chronicle—all washed down by heady draughts of conspiracy theory. I am glad to take on the hon. Gentleman point by point and answer the questions that he has posed.
Tonight's debate is taking place against a background of the sad receivership of Swan Hunter. The feelings of sadness run deep on both sides of the House. Swan Hunter is a proud name and a great yard which has built warships for the Royal Navy to the highest standards for many years. For that company to go into receivership with a potentially large loss of jobs is a human and commercial tragedy which we all deeply regret.
However, according to the words of the Opposition's motion and the flamboyant language of the hon. Member for South Shields, the Opposition seem to want to express not regret, but recrimination. In the motion they accuse us

of behaving in a "callous and cavalier" manner towards Swan Hunter. That is a false and baseless charge. I am glad to have a chance to answer it, and the fundamental question: could the Government have done anything to avoid Swan Hunter going into receivership? I am sorry to have to say that the only realistic and responsible answer to that question is no.
We think that the Government acted not only scrupulously fairly, but also as positively and helpfully as they could do in relation to Swan Hunter's helicopter carrier bid. Sadly, the plain truth of the matter is that Swan Hunter's deep-seated financial problems were far too great, and its bid for the LPH was far too high for the Government to be able to take any practical steps that might have helped the company to avoid receivership.

Mr. Frank Cook: What is the Government's intention with regard to the three frigates awaiting completion in the Swan Hunter yard?

Mr. Aitken: Those matters are being discussed by my Department and the receiver, who has already been good enough to describe our attitude to the problem as positive and constructive. We hope that it may be possible to finish the ships in the Swan Hunter yard, but that is a matter for continued negotiation and discussions between the receiver and us.
When bids are more than £50 million apart and the lower bid fully meets the Navy's requirement, no responsible Minister, in the interests of being fair to the taxpayer or the competitive bids, would argue in favour of accepting the higher hid. He would have to be certified to do so. I am glad that the one theme of commonsense that emerged from the hon. Gentleman's speech was that he seemed to recognise that, although it was not recognised by some of his Front Bench colleagues in yesterday's debate.
I recognise that what I have just said is unwelcome news to some hon. Members and some outside commentators who have spoken out so vociferously in understandable sympathy with Swan Hunter in the past few days. But defeat in a major commercial bid competition is often the father of unconvincing excuses and sometimes, as we have seen tonight, even the mother of ridiculous conspiracy theories. I am glad to have this chance to answer, point by point, some of the allegations that have been floated, particularly those made in yesterday's debate by the hon. Member for Newcastle on Tyne, East (Mr. Brown). He made the totally unconvincing charge that Swan Hunter's failure to win the LPH competition was the deliberate fault of the Ministry of Defence.
As my right hon. Friend the Prime Minister made clear last week, the Government were sufficiently concerned earlier this year about the deteriorating financial situation at Swan Hunter to bring forward by several months the LPH bids and their decision on them. We felt that by giving Swan Hunter a fair chance to win the competition we were offering the yard and its employees their best and perhaps only immediate chance to secure their future.
I think that that was well recognised at Swan Hunter. When I visited the yard on 3 March I found that most people with whom I talked, especially the union leaders, recognised that the company had to put in a keenly priced bid to win the contract against what they must have known


would be an equally keenly priced bid from their competitor, VSEL, which also had profound employment and other worries.
When the two bids came in, we were surprised, just as others have subsequently been surprised, by the size of the difference between them. It was, as I have already said, a difference in excess of £50 million. However, we were not surprised that VSEL's bid was so low, but that Swan Hunter's bid was so high. The VSEL bid did not surprise us because it came in at about the price which the internal estimates of our experts had suggested would be a fair and proper price for such a ship.
The hon. Member for Newcastle upon Tyne, East made a number of fanciful claims in the House yesterday which deserve a rebuttal. First, he suggested that we deliberately changed the specifications to increase Swan Hunter's costs. Let me make it clear that both yards tendered a ship to meet exactly the same specification.

Mr. Stephen Byers: The Minister will be aware that one of the concerns is that the yards may have been tendering for two different sorts of ship. Will he comment on the statement made this afternoon by David Smith, the commercial director of Kvaerner Govan, that the company tendered for a commercial vessel, whereas Swan Hunter tendered for a naval vessel?

Mr. Aitken: I shall comment not on the statement as I have not read it, but on the hon. Gentleman's general claim, which is not new. The charge has been made several times in the feverish atmosphere of the past few days. However, I shall first respond to the issues raised by the hon. Member for Newcastle upon Tyne, East.
Some changes were included in the specification issued with the invitation to submit best and final offers. Those changes were, in general, relaxations of the specification. Swan Hunter made some material additions to its bid to meet that relaxed specification, but none would begin to account for the extraordinary gap in price between the two final bids.
There have been claims—such as those just made by the hon. Member for Wallsend (Mr. Byers)—that Swan Hunter bid for a warship and VSEL bid for a merchant vessel or commercial ship. As I have said, our requirements and specifications were made crystal clear to both companies. We operated on an entirely level playing field. We did not, as some have claimed, ask one company to bid for one sort of ship and the other company to bid for a quite different sort of ship. Although they based their bids on different designs of their choosing, the similarity between the two proposals was remarkable.
The tonnage of both bids was virtually the same, the length of the two designs was the same to within a few metres, and the width or beam of the ships was almost identical. Both companies bid in the knowledge that we required a merchant shipping quality hull rather than a warship quality hull as we have always seen the LPH as a vessel that is likely to stand off from the heat of the land or sea battle protected by a frigate or destroyer escort.
The hon. Member for Newcastle upon Tyne, East claimed that VSEL unfairly subsidised its bid. Our shipbuilding experts in the Ministry of Defence were not born yesterday. They were always on the lookout for what is called "buying the contract" by VSEL by cross-subsidies

or by unfair underpricing. But we found no evidence of such practices in the VSEL bid, which I emphasise came in at the ballpark level of price which we expected for such a vessel.

Mr. John Wilkinson (Ruislip-Northwood): My hon. Friend the Minister is being extremely helpful to the House. Will he give the figures for the bids tendered by Swan Hunter and VSEL/Kvaerner Govan in the first round, and in the second—the best and final—round?

Mr. Aitken: For good reason, it is the practice of the Ministry of Defence—at the request of all competitors—not to give detailed, specific figures. We are prepared to supply the figures to the National Audit Office, but for reasons of commercial confidentiality—

Dr. John Reid: Not good enough.

Mr. Aitken: We have clearly explained the gap between the two bids, and we have not been criticised for giving the broad figure.

Dr. David Clark: The Minister has tried as best he can, given the difficulties with commercial confidentiality, to explain the matter to us. I must ask him, however, whether the difference in the initial bids was as great as he suggests. Was there a considerable difference between the initial bids? When was the final bid actually received?

Mr. Aitken: I cannot give the hon. Gentleman the precise date, because it was only a few days—[Interruption.] My colleague will give the answer in his reply to the debate, because I do not have the precise date in my head. There was certainly a gap between the original bids and the second bids, but the best and final offers were the ones that counted.

Dr. Clark: The Minister has misunderstood my genuine inquiry. Was there a difference between the bids of the two companies at the initial stage?

Mr. Aitken: There was certainly a difference, which did widen. We do not give the figures, for reasons of commercial confidentiality. The detailed figures that the hon. Gentleman requests should not be given across the Floor of the House, but they will be given, in terms of commercial confidentiality, to the NAO and, if appropriate, to the Select Committee.
Finally, and most conspiratorially of all, the hon. Member for Newcastle upon Tyne, East, echoed by the hon. Member for South Shields, told us that my Department had been plotting the downfall of Swan Hunter for some months. That is an absurd accusation, not borne out by the facts that I have given the House.
To return to reality: we evaluated the bids thoroughly against our usual technical and value-for-money criteria. We examined them for omissions or signs that the bidders had under-estimated the complexity of the task of the risks involved. We took our findings on these points into account when reaching our final decision. It was the VSEL bid that fully met our requirements, at the price that we had expected to pay for such a ship, and it was more than £50 million lower than the Swan Hunter bid. In those circumstances, we had no choice but to accept the lower bid.
After saying so much about Swan Hunter, it is only fair to congratulate VSEL on putting in a first-class, highly competitive bid.

Mr. Nicholas Brown: As the Minister has referred directly to me, I am grateful to him for giving way. I understand that, following my speech yesterday, he is under a duty to attack me—but much of what he has said merely confirms what I said then. Will he tell the House whether the AOR1 bid was carefully checked by the Department for cross-subsidy, and whether there was such a large difference between the initial bids of VSEL and Swan Hunter that the Government felt that they had to place the order with the former and could not proceed with Swan Hunter?

Mr. Aitken: I have never heard such a wriggling intervention. I have just blown up every one of the charges that the hon. Gentleman launched last night, and now he says that my speech has confirmed what he said. The AOR1 was a politically directed bid to Harland and Wolff. That did not turn out successfully; it is not comparable with a competition that we evaluated purely on technical and value for money grounds.
My last point on the subject of Swan Hunter is that the Department welcomes the initiative taken by the Select Committee to ask the National Audit Office to review our bid evaluation and selection process. We have nothing to hide in this matter. The bids were carefully evaluated with the integrity and professionalism that we have long come to expect from my Department's sea systems controllerate.
I am sorry that the hon. Member for Newcastle upon Tyne, East appears to be repeating the grave slur that the books were cooked or the figures rigged in order to tilt the bid away from Swan Hunter. I hope that he will, in a calmer moment, think of withdrawing the allegation that he made last night. I do not believe that he possesses a shred of evidence to support it.

Mr. Nicholas Brown: I will willingly acquit the Government, the Prime Minister and the Minister of the charge of deliberately closing Swan Hunter as a warship building yard if the Minister will now say that the Ministry of Defence is willing to put further warship work into Tyneside.

Mr. Aitken: The hon. Gentleman is turning himself into a stunt man, which is not like him. I understand his frustrations as a constituency Member—frustrations felt just as keenly by other constituency members. The future of Swan Hunter must depend on its future ownership, about which I can say nothing tonight.
My point is that we welcome the involvement of the National Audit Office. We are glad to supply the factual evidence—it appears of little interest to Labour Front-Bench spokesmen—to the Select Committee and the NAO. That is not a precedent, so it is no use the hon. Member for South Shields trying to claim credit for a breakthrough.
In the past, we have routinely given information on our handling of major procurement projects to the NAO and the Select Committee in commercial confidence, if they have asked for the information. We are perfectly happy to accept this extra dimension of oversight, and we are confident that our judgment will be seen to be right, in the interests of the taxpayer and in the interests of upholding fair play as between competitive bidders.
The hon. Member for South Shields launched an attack that went much wider than just our handling of Swan Hunter. His debate was originally entitled "The destruction of Britain's defence industrial base". Evidently

there were some nervous second thoughts and cooler heads prevailed, because the words "destruction or have been lifted from the title. The thinking behind the motion, however, remains the same.
Judging by the motion and by the hon. Gentleman's dyspeptic undertaker's manner of delivery tonight one might be forgiven for thinking that Britain's defence industry was tottering towards the grave. It is not even a case of
Reports of my death have been greatly exaggerated",
as Mark Twain once said: Britain's defence industrial base, as I shall go on to point out, is thriving in the circumstances.

Mr. Phil Gallie: The hon. Member for South Shields (Dr. Clark) referred to diversification in the defence industry, and to the Rosyth dockyard and the overhaul of underground carriages. Was it not the Government's far-sighted vision, when they privatised the dockyard, which gave it that ability? Did not Opposition Members oppose that privatisation?

Mr. Aitken: I thank my hon. Friend for that good point. The consortium that runs the dockyard has been able to diversify splendidly without any help from an expensive Government quango of the sort that the hon. Member for South Shields wants to set up. Business makes these decisions better than advisers in the Government trying to second-guess commercial affairs.
We had better define what Britain's industrial base is. We believe that it includes about 440 United Kingdom-based companies which last year won contracts from the Department worth £1 million or more each. The defence industrial base employs, directly or indirectly, about 500,000 people. It won domestic orders from us worth £8·8 billion, and it won export orders for overseas contracts worth £5·1 billion.
Within an industry of this size and complexity there are bound to be winners and losers, but even in the difficult post-cold war climate, in which defence budgets are diminishing—our own by 10 per cent. over the next three years—a great many British defence companies are not merely surviving but thriving. One reason for that is the boom in exports of defence equipment. Britain's defence exports are a tremendous success story. For the year ended 31 December 1992 Britain achieved defence export orders worth more than £5·1 billion, or 20 per cent. of the world market. Both are record figures. This year we will do even better.

Mr. Ian Davidson: Would the Minister clarify whether there will be defence cuts of 10 per cent. in the next three years?

Mr. Aitken: I said that the defence budget planned a reduction of 10 per cent. over the next three years—

Dr. Reid: So it will decline by 30 per cent. in the next nine years.

Mr. Aitken: More statistical juggling by the hon. Gentleman. We do not employ Labour's voodoo economics in our party. I know that Opposition Members cannot stand hearing good news, but that is what I am trying to give them.
I was saying that our record-breaking defence exports are no flash in the pan. They are the result of a lot of hard work by British companies and by the Defence Export


Services Organisation, and they are greatly to the credit of our competitive procurement approach. We can say proudly that defence exports are rising, have risen and will continue to rise. In 1982, they were worth £1·7 billion, but they are now three times higher at £5·1 billion and we confidently predict another record-breaking year in 1994 and a world market share of even more than 20 per cent.
It is not only our exports that support the defence industry. Domestic procurement is a vital factor, and although it is undeniable that the defence equipment budget is declining in real terms, we remain British industry's biggest single customer.
I am lucky enough to be able to travel all over the country to Britain's defence companies and I enjoy good dialogue with many of them. Since my surprising elevation to the Front Bench last year, I have made about 30 industrial visits to companies and have had more than 50 meetings with company representatives. I simply do not recognise the pessimistic portrait of the defence industrial base painted by the Opposition.
I shall come in a moment to the issue of jobs and diversification, but I urge the House not to make the mistake of believing that the outlook for our defence industry is one of gloom and doom. Many of our defence companies are continuing to do well. They are maintaining their profitability and turnover, winning new business and reshaping their activities to take advantage of their market strengths.

Mr. Ian Bruce: Does my hon. Friend agree that one of the problems faced by the shipbuilding industry, especially in relation to warships, is that for some reason it has not sold a single new large frigate to any other nation? If shipbuilding followed the example of the rest of the defence industry, all these jobs would not be lost on Tyneside.

Mr. Aitken: I am afraid that my hon. Friend is inaccurate. He is not even close, because we have some successful warship export orders. We have been listening to a litany of woe about shipbuilding, so I shall give some examples of successful companies. Vospers of Southampton has a record order book of £700 million, which has doubled in the past 12 months, and 95 per cent. of that is for export. Vosper employs 2,000 people and plans to recruit another 200 for its present order book. Although it remains a 90 per cent. defence company, it is broadening the base of its business into new markets without any help from Government quangos, such as the diversification agency suggested by the Opposition.
There is plenty of good news in the aerospace sector. The Government's resolute support for the important European fighter aircraft has given work on the development phase to some 300 United Kingdom-based companies. I was not surprised by the big cheer and the warm reception that greeted my right hon. Friend the Prime Minister when he visited the aerospace workers of Lancashire at British Aerospace's Warton factory last month, given all that he has done for the EFA and Tornado exports. [Interruption.] In the light of the Opposition speeches, one would not think that there was all-party support for the defence industrial base. The party workers may cheer the Prime Minister, but the Opposition spokesman did his best to talk Britain's industry down.
There is also good news for land systems. Only last Thursday I visited the modern and highly efficient production line of one of our major manufacturing companies, GKN Defence at Telford, which makes the world beating Warrior armoured personnel carrier that has served our troops so well in Bosnia. I certainly did not find my GKN hosts wreathed in doom and gloom, but I learned an instructive lesson on jobs.
I said to the engineers working on the production line, "If you win, as I think you will, the £1 billion-plus Kuwait order for Warrior, which we are now negotiating Government to Government, will you take on much more labour?" In effect, the answer was, "Well, perhaps there will be a few more jobs, but not many." I was surprised by that answer but I soon learned how GKN, like so many of our defence companies, is steadily becoming tauter, leaner and more productive, partly at least by engineering labour out of the system through high-tech advances.

Mr. Derek Conway: My hon. Friend's visit to Shropshire to the GKN plant was greatly welcomed. As he knows, the engine for the Warrior is built in Shrewsbury by Perkins. The Warrior is not only an excellent vehicle but has an excellent engine. On behalf of Shropshire, I thank my hon. Friend not only for his highly successful visit, which was well covered, but for his efforts to help us to sell Warrior. It is a superb vehicle made by a good work force who deeply appreciate the efforts that he and my hon. Friend the Minister for Trade made to keep jobs and businesses in Shropshire.

Mr. Aitken: I thank my hon. Friend for his gracious intervention. I shall repay the compliment by saying that the people in the factory there think that he is a superb parliamentary advocate for their cause, which he is.
Time and again I was shown new equipment which, sadly in human terms, mean that the human element on a factory floor is often diminished. A computer-guided friction welder means, sadly, that fewer human welders are necessary.

Dr. David Clark: We accept that.

Mr. Aitken: I am not sure whether Labour's Front-Bench spokesmen have accepted that, but I am glad to hear it.
Visiting a modern defence company is more like visiting the frontiers of new technology. My hon. Friend the Member for Shoreham (Mr. Stephen) is in his place. Earlier this month I visited his constituency and saw three of our smaller defence companies which are all at the high-tech end of the business; companies such as Link-Miles, Ricardo Engineers and ECC Simulation, and they are all engaged on high-tech work in computer software.

Mr. Michael Stephen: My hon. Friend's visit to my constituency was greatly appreciated, and I hope that he found it valuable. I should like to be assured on three matters. First, the costs of bidding for—

Madam Deputy Speaker (Dame Janet Fookes): Order. The hon. Gentleman seems to be about to make a speech.

Mr. Stephen: Could the Minister give me an assurance on one matter? I may have an opportunity to speak later in the debate. Will he assure me that the Government will


do all that they can to reduce the cost of bidding for defence contracts, because those costs are becoming an almost impossible burden for medium-sized companies?

Mr. Aitken: Yes, I can give my hon. Friend that assurance. We have embarked on a major contracts review to simplify the procedures, and we have small and medium-sized companies very much in mind.
The Opposition spoke about a defence diversification agency. There is no serious merit in that wonderful wheeze. They say that the Americans do it, but they should look at some of the reactions of the Administration to the initiative that has been lodged. For example, The Wall Street Journal had a full-page article—[Interruption.] It is better than—

Madam Deputy Speaker: Order. I hope that the Minister and the Opposition Front-Bench spokesmen will not engage in semi-private conversations. We should all like to hear what is being said.

Mr. Aitken: I am doing my best to be publicly heard.
There has been criticism of the notion of a magical new formula. I should like to quote no less a figure than the United States Deputy Secretary of Defence, Mr. Bill Perry, who described the record of industrial defence diversification as:
unblemished by a single success.
The Opposition idea of introducing such unsuccessful projects to our economy is a misguided return to the old days of the national enterprise board.

Mr. James Hill: The Minister mentioned the firm of Vosper. On Monday, not only did the President of the Board of Trade visit Vosper, but the Lord Lieutenant of Hampshire gave the firm the Queen's award for exports. That disproves the assertion that some of our yards are not exporting. A company with a record like that should be supported and in the not too distant future it will look towards the Government.

Mr. Aitken: The diet of good news is too much for the Opposition.

Mr. Simon Burns: Does my hon. Friend agree that my constituents who work for English Electric Valve would be heartened if the Opposition sought ways to help the Government to persuade the Americans to drop their protectionist policy which prevents image intensifiers being sold to the American Army? That would be better than raising hypothetical cases about a diversification agency in America that does not seem to work properly and, I suspect, never will.

Mr. Aitken: My hon. Friend is right to make the point that, apart from the defence diversification wheeze, we had not a single constructive new idea from the Opposition, only one long whinge.
The debate has marked a new milestone in the Opposition's slide into opportunistic political humbug. The hon. Member for South Shields—CND, retired—represents a party which, let us remember, has voted four years in a row at its annual conference for a 25 per cent. or a £6 billion cut in Britain's defence spending. Now he suddenly proclaims that. Britain's defence companies need more orders.

Mr. Davidson: Will the Minister give way?

Mr. Aitken: No, no more interventions.
What on earth was the flash of light that brought about that conversion? The cause of the U-turn, transforming the hon. Gentleman and a few of his hon. Friends who agree with him into the new military tendency, a party within a party that now opposes reductions in defence spending and proposes extra orders to create employment in defence companies, was that the Government placed a large defence order for a helicopter carrier, fairly and honourably won by a wide margin by VSEL.
In using an Opposition Supply day in this way, the hon. Gentleman has caused some splits and ructions in his party. Perhaps that is why he had to change the title of the debate. But it would be interesting to know where will be the dogs that will not bark tonight from the Opposition Benches. Where will be the voices of Scotland, Clydeside, Barrow and all the other constituencies in which jobs will be created by the LPH order? I do not think that we shall hear them joining the preposterous cry of foul play on the basis of no evidence.

Mr. John Hutton: Many of us hope to contribute to the debate, but because the Minister has been on his feet for so long, many of us will not have the chance to do so.

Mr. Aitken: The hon. Gentleman has not been backward in speaking in defence debates. During his recent Adjournment debate he talked of the terrible suicide rate in Barrow and the tranquillisers that were needed, all because orders were desperately needed. Now that the region has an order, it might be gracious enough to say what a successful job the Government are doing.

Mr. Davidson: Will the Minister give way?

Mr. Aitken: No, no more interventions.
I do not believe that in the Labour heartlands people will join in the preposterous cries of foul play that we have heard from the Opposition. They will not believe in the destruction of Britain's industrial base when taxpayers' resources are being so visibly directed to this sector of Britain's manufacturing industry, not just with the LPH order, but with the EFA project, the Challenger project and many other defence projects that I could list.
Not everyone likes the implications of the Opposition motion. I read with great amusement in The Guardian last Saturday an interview by Mr. Andrew Rawnsley with that old Nestor of Labour Secretaries of State for Defence, Lord Healey. On the Opposition's defence policies he said:
We have become very timid. We tag along, we attack every proposal for cutting defence spending for example. Sometimes we attack the Tories for cutting when it is clearly absolutely essential. This for me is one of the tragic legacies of Bennery.
There we have it—Bennery, Clarkery, CND current, CND retired. As Shakespeare said:
there's small choice in rotten apples.
The rotten apples have given us a rotten motion. It takes no account of the good strong trees that are growing sturdily in Britain's defence industrial base. It takes no account of our £8 billion a year spending on Britain's defence companies. It takes no account of our £1·2 billion market testing programme which offers big new commercial opportunities to Britain's defence companies. It takes no account of our record-breaking export figure of which I have spoken.
No, Britain's defence industrial base is standing up well in the post-cold war climate. We can be proud of it. We can


be proud of it's achievements. We can be proud of the Government's support for it. The Opposition have chosen their weapon for this parliamentary duel. They have chosen a boomerang and it will rebound against them. I urge the House to reject this absurd motion.

Mr. David Young: Listening to the spate of self-congratulations coming from the Conservative Benches, one might have thought that we were approaching a general election rather than just having had one. All hon. Members were glad to see the thawing of the cold war. But as the threat of that cold war diminished, other strategies were called for, strategies on forces and on the military supplies to those forces. That is where the Government have been lacking. If my hon. Friend the Member for South Shields (Dr. Clark) seemed like an undertaker, it may have been because he was burying the Government's pretence to have strategies to deal with the new circumstances that come before us now.
Between June 1990 and May 1993, about 55,000 workers in defence industries lost their jobs. A British Aerospace factory near my constituency has, during the past few years, had its work force halved. It is obvious, and it is said throughout the north-west, that once a highly skilled defence engineer is sacked, he seldom reappears in engineering. I should have thought that, given the Government's commitment to the manufacturing industry and the fact that between 1979 and 1993 five jobs in the manufacturing industry in the north-west were reduced to two, there is a need for all the highly trained skills that we have dispensed with and are dispensing with in the former defence industries to transfer to manufacturing.
Other priorities have appeared. When the cold war thawed, the United Nations demands became greater. Demands were created by nationalism in Yugoslavia. There were other United Nations involvements in Cyprus, Angola, Somalia and Bosnia. British troops may not be involved in all those cases, but it is obvious that the United Nations will become more and more involved and more and more troops will be needed. Britain will more and more be called on to provide those troops, not only over a few months, but over many years.
The Government do not appear to have a long-term strategy for that changed situation. It is a difficult problem and it is one to which we must now bend our minds. I listened with interest when I met the British ambassador to the United Nations recently and my feelings are confirmed by his experience, which shows that we must start planning for a situation in which British forces are frequently used as part of a world peace-keeping force.
Military strategy also demands an industrial strategy. The trade unions, which the Government often attack, made clear the position. They said that we require a coherent total approach which first defines defence requirements and secondly ensures that forces can count on adequate manufacturing capacity in Britain. That does not mean that we can manufacture everything that our forces require, but it means that, when we have a tried product, we should look after it.
For example, the British Government failed to intervene positively in Leyland DAF in the way in which the Belgian Government did. A company in my

constituency, Edbros Engineering, supplies the bodies for the Leyland DAF trucks which are used by the British Army—the tried four-by-four trucks that are in use in Bosnia. I am saddened to see such a national resource of a tried piece of equipment being thrown into jeopardy because the Government are unwilling, through party dogma, to support the companies that produce that equipment.
I am not asking for subsidies, but I am asking for positive financial help to allow those companies to continue. [Interruption.] While Conservative Members may scorn, other Governments and our European partners do not hesitate to give such assistance. Perhaps that is why they have a manufacturing industry while ours is in decline—because our Government will not put the national interest first. Try telling the French, when their industries and jobs are involved, that it is not wise for their Government to intervene. If the Government had intervened a little more, there would he fewer people in the dole queues of Britain today.

Mr. Richard Spring: About 100,000 people are employed in defence exports. Can the hon. Gentleman speculate how many jobs would be lost if Labour's policy of further restricting defence exports was introduced?

Mr. Young: I will not hazard a reply, but had we been a little more selective after Iraq, we would not have found ourselves in the position that we did.
I have one constant principle, which is not a Labour party political principle, but comes from having served in the British forces. Nothing is more disheartening to the sailor, soldier or airman than seeing comrades slaughtered by home-produced equipment. If we are cautious about exporting arms, I would have thought that recent history justified that caution.
We need defence and defence forces and Labour has said that it will never leave this country undefended. We have a duty to our service men and women to ensure that they are adequately backed by the equipment that they need. Equally, if particular industries and special skills become redundant—and even with British Aerospace's success with the Eurofighter, it accepts that thousands will still have to be dismissed—there is a duty on the Government to ensure that the skilled work force are retrained and redeployed in manufacturing industry, which we need in the peacetime battle for our economy.
I am not against the concept of competition, but with VSEL and Swan Hunter, Government principles of competition—if "principles" is the right word in that context—have been taken to the extent that Britain now has a monopoly supplier of warships. A monopoly sits ill with the concept of competition.
I argue for a new strategy for the future role of the British forces in the new context in which we find ourselves, and a new industrial strategy for the supply of defence equipment to those forces. It is to be hoped that equipment will come from our own industries. If we need to collaborate with our friends in NATO, we should examine joint products in which British manufacturers could be involved.
When the skills of the British defence industry workers must be dispensed with, there should be a strategy of


retraining and redeployment so that those skills can be adequately used in this country's manufacturing industries, which are the economic lifeblood of the nation.

Mr. Simon Burns: I hope that the House will forgive me if I make an unashamedly constituency speech, because Chelmsford is greatly reliant on defence industries. I am delighted to see my right hon. Friend the Leader of the House in his place, because he represents an adjoining constituency and many of his constituents work in the four main companies in Chelmsford that meet many of our armed services' defence requirements.
Chelmsford has traditionally been heavily reliant on defence jobs because it is the home of the Marconi companies—Marconi Communications, Marconi Radar, English Electric Valve Company and Marconi Research. In the past 12 months, we have paid a heavy price in redundancies at three of those companies because of changing world patterns.
Despite jibes made earlier in the debate, nothing is more demoralising or debilitating than people who desperately want to work being out of work. Let no one make the mistake of thinking that the vast majority of registered unemployed are scroungers. They are not— they are desperately seeking to return to work and to use their skills. That is particularly true of those from the defence industries, who are a highly skilled, highly motivated work force who produce defence equipment, as well as communications equipment, for not only this country but others.
Unfortunately, as in other parts of the country and throughout the world, Chelmsford's defence companies have paid a heavy price for two reasons. The first is the ending of the cold war, the dismantling of the Berlin wall and the peace dividend. All nations have been compelled substantially to rethink established defence views and the future of their defence industries. The dramatic ending of the cold war came as a surprise, as did the crumbling of the nations in the eastern block.
Secondly, the worldwide recession has not only meant that United Kingdom companies have been fighting a continuing battle to be competitive, but it has had a knock-on effect on other countries, which have also cut their defence requirements—and because the United Kingdom has such an excellent defence exports record, it has been affected. I am delighted that British industry has responded to that challenge and continues to fight throughout the world for orders for its first-class military products.
It has not escaped the attention of companies in my constituency and in others that there is a need to diversify, so that they have a better balance between military and non-military orders. There has been diversification in companies such as Marconi Communications for several years—even before the ending of the cold war. In the area of civil communications, Marconi Communications supplies high-power and low-power radio and television transmitters to the BBC, IBA and clients worldwide. It sells space communications equipment to British Telecom and Mercury and marine and other equipment that can be used in civil applications but also adapted for the military.
Marconi Communications also sells military communications equipment, such as the Scimitar backpack —although that business is declining because of the

situation in this country and worldwide. The company also helps to equip the Royal Navy, the United States navy, Holland and the far east with communications products. There again, the market has contracted because of the changes in our defence requirements.
In anticipation of changes and to break down reliance upon military equipment, a few years ago Marconi Communications began to invest heavily in developing new non-military products—for instance, special vehicle radios for the emergency services: the police, the fire service and the ambulance service—in the use of the old VHF television frequencies for equipment, thus giving large transport organisations direct contact with vehicles on the move, and in special projects, including radio distress signalling for fire brigades, portable space equipment and public telecommunications.
It is slightly odd that the hon. Member for South Shields (Dr. Clark) made no mention of the fact that it was a Labour conference two years ago that supported and voted for a policy that would cut defence spending by £6 billion. If implemented, that policy would mean far more job losses in companies similar to those in my constituency.
If my memory serves me aright, the policy of the Liberal Democrats is to cut defence spending by 50 per cent. over 10 years. That would not bring much comfort to my constituents, certainly to those who work for companies such as Marconi. In my constituency, the Marconi Radar company supplies defence equipment to the Royal Navy. It has had an extremely tough time, but it, too, is seeking to diversify to make up the shortfall on the military side of its business.
English Electric Valve has gone through a difficult time. In February and March last year, English Electric Valve, which produces the third generation image intensifiers—a first-class world product—was saved from having to make substantial redundancies by an order that it won from the Ministry of Defence. My right hon. Friend the Leader of the House, the Member for Braintree (Mr. Newton) and I, as constituency Members of Parliament, brought to the attention of the Ministry of Defence the fine qualities of that product. I thank the Ministry of Defence for placing that contract with English Electric Valve.
What is particularly galling is that we do not necessarily fight on a level playing field with overseas nations. Through an Act of Congress, the United States Department of Defence forbids companies such as English Electric Valve from tendering to supply the United States Army with image intensifiers. That is wrong.
I raised the matter two years ago with the then Minister of State for Defence Procurement. Through the offices of the British embassy, he kindly raised the matter with and vigorously lobbied the US Government and the Department of Defence on the unfairness of the unlevel playing field. Unfortunately, the Americans refused to budge and change their policy. It is highly protectionist and it is wrong. If there is a first-class product, it should be able to compete worldwide, particularly if the Americans are to compete in our markets.
I pay tribute to the Minister of State for Defence Procurement for the fact that over 90 per cent. of the defence requirements of this country are placed with British companies, which saves British jobs and provides the British armed forces with first-rate equipment. That is


right and it must continue. It is important that we should look after our own, provided that the product is cost competitive and that its quality is right.
At a time such as this, when companies are having to make a difficult transition, it is important that the Ministry of Defence should place, whenever it is feasible and possible to do so, its orders or its upgradings or maintenance contracts as quickly as is humanly possible with companies so as to encourage them to continue to provide those services. I am sure that the Minister is more than aware of the need to do so and is seeking ways to ensure that that is done.
It is important for us not to get sidetracked by the tantalising but unrealistic suggestion that an agency such as a diversification agency is the panacea for all problems. Industry and commerce, which have their own entrepreneurial flair and leadership, do not want and do not need politicians to interfere and tell them how to run their businesses and how to win orders. It is important that business men, management and the work force should work together, invest heavily in research and development and come up with ideas for products that are viable and relevant to the needs of the market in both the military and non-military spheres. In that way, and by being highly competitive, they will win the orders that will allow the technological trail blazing and frontier busting to continue.
Furthermore, it should not be forgotten in a debate of this nature that the British Government provide help both to defence-related companies and to others that have nothing to do with the defence industry. For example, the Budget provided for export credit guarantees to be extended. That will benefit companies. The Government also support business men when they go overseas and try to get people to buy British.

Mr. Iain Duncan Smith: So that Opposition Members can understand more fully what my hon. Friend says about diversification, another Marconi company looked at its transponder work for satellite dishes, went into the television side and produced transponders for Alan Sugar's satellite terminals. That was an intriguing diversification. It was not, however, driven by the Government. It was driven by private industry looking for ways to diversify.

Mr. Burns: I am grateful to my hon. Friend, who has identified another area where the flair of private enterprise and the acumen and intelligence of the boffins can work together to identify something new and exciting to present to the market and, we hope, have a successful launch and then win orders and secure jobs.
We should not forget, either, the help that the Department of Trade and Industry gives by means of changing tack seminars, which encourage companies to build on their excellent skills and technology and develop new business through diversification. Many schemes focus not so much on the large defence companies but on small and medium-sized enterprises, of all natures. The enterprise initiative consultancy scheme provides financial support for consultancy help in designing, marketing and manufacturing systems and business plans and spurs support for products under research. The aim is to help to develop new products and processes, thus pulling research

capability towards the marketplace. There are many exciting initiatives to help businesses of all sizes. They should be embraced and used to their nth degree to help businesses.
The KONVER programme was referred to briefly by the hon. Member for South Shields, but he was then diverted from it by an intervention. That scheme was devised by the European Commission. However, because of delays in the Commission notifying member state Governments, the programme is still being discussed and put together. It is an important programme. If the European Commission is to provide money, any member state should be able to take advantage of the funding made available.
I am sure that all hon. Members who have an interest in the subject will look closely at the result and will seek to push the interests of their constituencies, if they think that they could benefit from the programme. If there are to be European initiatives, it would be foolish of us not to take
It is crucial that the companies should be competitive and should diversify of their own free will with flair and initiative so as to be able to meet the challenges of the 1990s in a world where there will be fewer defence orders and compete successfully for both defence and nonmilitary orders, thus ensuring that people can get back into work and use their skills. Too many highly skilled people are out of work. They must be given every help to re-skill so that they can get back to work and once again be productive and generate orders and products for this country.
I am extremely grateful for this opportunity to debate a subject that is important to many of my constituents who have been going through a very tough time. It is important for them to know that they are not forgotten and that action is being taken at Government and company level to solve their problems and to give the individuals and companies involved the opportunity to flourish and get back to work as quickly as humanly possible.

Several hon. Members: rose—

Madam Deputy Speaker: Before I call the next hon. Member, may I point out that many hon. Members are seeking to catch my eye and it would be appreciated if those who are called to speak would keep their contributions as brief as possible.

Mr. Malcolm Bruce: I am sure that the hon. Member for Chelmsford (Mr. Burns) is worried about his constituents, but his message is a little confused and contradictory. He began by saying how concerned he was about how many people in the defence industry were out of work, but concluded by saying that everything appeared to be going well. The two comments cannot be squared. He also appeared to denounce any new Government help but then welcomed a number of existing Government initiatives.
We must recognise the reality of the situation, a point mentioned by many hon. Members. We all make party political points about who will cut defence spending most —that is easy—but we must accept the facts. In 1984–85, spending on defence amounted to £26·3 billion; education spending was £24·9 billion, health spending £25·3 billion and social security spending £60·6 billion. In the last complete year, defence spending was down to £22·8


billion, education spending was up to £31 billion, spending on health amounted to £33·2 billion and spending on social security £75·9 billion. That is the reality of the cuts that have been imposed. Most people working in the defence industry are more interested in the current climate than in the threats of the Opposition, who, after all, did not win the election. The consequences of the cuts are that there has been real pain.
I always enjoy the speeches of the Minister of State for Defence Procurement. He said that he was surprised at his promotion, but I was not. We have debated a number of issues, and I believe that his promotion was well deserved, although he may be rather surprised at where he has ended up. He dealt constructively with a number of the issues that have been raised, but he must recognise that the cuts mean that orders are not reduced, which has repercussions for an important sector of our manufacturing industry and for the highly skilled people who work in it.
The trigger for this debate has been the crisis at Swan Hunter as a result of the placing of a recent order. I shall deal briefly with that issue and then make some more general comments.

Mr. Richards: Will the hon. Gentleman give way?

Mr. Bruce: No, I shall respond to the constraints of the Chair. I know that there is not a 10-minute limit, but I must press on.
The Minister and the hon. Member for South Shields (Dr. Clark) have made it quite clear that when there is a discrepancy of £70 million in a bid there is no question of choice. As someone who stood a little apart, I wondered why, given the scale of Swan Hunter's failure to make a competitive bid, expectations had run so high. What made Swan Hunter believe that it was close to winning the order? Was it a mistake on its part in wholly misreading the runes or misunderstanding the signals, or were there factors at play which it did not appreciate or of which it was not aware?
I welcome the fact that the National Audit Office has said that it will investigate. It will be no consolation after the event, but the investigation might come up with an answer. The Minister said that the Government would make the relevant information available, which is constructive.
Several questions arise from the placing of the order. The Minister said that the Government were not surprised by VSEL's bid but that they were surprised by the size of Swan Hunter's bid. That at least moves on the question that my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) asked in the House the other day. He wondered whether there was any sign that Swan Hunter had been encouraged or advised to include a wider spread of overheads and costs in its bid whereas VSEL was able to offset some of those costs because it had the benefit of previous contracts. I know that the Minister cannot answer that question directly, although he seemed to imply that that was not his understanding of the case.
We are given to understand that, although the two designs were similar, given the difference in price the guts must have been different, whatever they looked like. Alternatively, one must conclude that Swan Hunter was shooting in the dark at what it thought were the Ministry's expectations. Such questions need to be asked, and we shall no doubt hear more about them in due course.
Another issue that arises, not only in relation to Swan Hunter, is the Ministry of Defence's apparent slowness to pay. Apparently, £20 million is due to Swan Hunter. That may not have forced it into receivership—losing the contract was perhaps the final straw—but £20 million is a considerable sum for a company to be owed by the Government. It has often been said in the House that, of all organisations within our economy, the Government should set an example of prompt payment. It does not help British industry to know that they are setting a bad example.
If we are to run down our defence manufacturing base, will we have a strategic overview at the Ministry of Defence or the Department of Trade and Industry—or preferably the two together—as to what that base should be? That point is mentioned in the amendment that I and my right hon. and hon. Friends have tabled to the motion. We believe that the Government should accept that, although we cannot retain our capacity at the previous level if the requirements are not the same, we cannot allow the vagaries of the outcome of a bid at a particular time to determine what our future capacity is likely to be.
Do we, in the national interest, need the capability that exists at Swan Hunter? Does it matter, not to the people of the north-east to whom it clearly matters a great deal, but to the nation as a whole if we lose Swan Hunter? The Government do not appear to have considered that aspect. Some of us would have a little more confidence in the forward thinking of the Government's management of the defence base if there were evidence that it was being considered.
If it was concluded that a certain capacity was required, we should have more confidence if a strategy were then determined to ensure that that capacity was maintained. That is why we have suggested a 10-year review of procurement contracts. I accept that that may be regarded as a long-term view, but it would be proof that the Government were considering not only the Ministry of Defence's requirements but the industrial base to supply them over a reasonable time. I hope that Ministers will be able to tell us whether that is being considered.
The motion mentions diversification, to which the hon. Member for Chelmsford also referred. Point scoring apart, there is general agreement that our defence base has contracted and that further contraction is likely. On the positive side, we must accept that within our defence capability there is a great deal of skill and technology and a resource that should not readily be dispersed. It is said that 45 per cent. of all Britain's research and development expenditure goes on defence.
If we remove that from the economy and do not seek ways of replacing it, our research and development base will fall alarmingly in comparison to that of our major competitors, and our ability to maintain—or even achieve —a competitive edge will be seriously undermined. I accept that the Ministry of Defence may say that that is not its responsibility, but it certainly is the responsibility of the Department of Trade and Industry to calculate the consequences of the rundown in research and development.
It is fine to do as the Minister and other hon. Members did and cite examples of the successes of companies that have managed to diversify or to redeploy, but those are often large companies that have been able to take time to readjust. Other companies do not have the ability to respond as quickly, and for every success story there are


stories of other companies that have not been able to move far enough or fast enough, either to stay in business at all, or to maintain anything like the size of their previous operations. For many companies it is wholly unrealistic to say that they should expand their research and development activities so as to move into new areas at a time when their market is contracting dramatically.
Private and City investors are likely to be a little sceptical about such a sudden switch, and about companies' ability to respond. Of course, some companies will be able to cope, but it is cavalier of the Government to dismiss out of hand the idea of agencies to assist companies that cannot adjust, or that require a little time. Yet it was the Minister who accused the Opposition of taking a cavalier attitude.
It is also important to realise that, however concerned we are to focus on the impact on the people of Tyneside of a disaster such as the Swan Hunter closure—there has been a catalogue of such events, and people understand what effect taking a major, long-established employer out of the heart of a community has on morale—the fact remains that the cut in defence expenditure affects almost every part of the United Kingdom economy.
The Minister said that more than 400 companies were regarded as major defence contractors, and my hon. Friend the Member for Bath (Mr. Foster) has given me a letter that takes the argument one stage further. A company in his constituency, Horstman Defence Systems Ltd., had a £300,000 order with Swan Hunter, and it looks like losing the outstanding balance of that, which amounts to £141,000. That company is probably not one of the 400-plus that the Minister identified, so we see the knock-on effect of the failure of a company such as Swan Hunter. There are signs that defence contractors in Scotland, in Wales and in the far south of England are affected, and we must recognise that many of those companies cannot respond quickly.
In my constituency we have a considerable number of high-technology companies engaged in the offshore oil and gas industry. The Department of Trade and Industry should take on board the fact that that industry is volatile; it goes up and down; confidence ebbs and flows, and activity increases and decreases. In the mid-1980s, there was a sharp downturn in North sea activity as the oil price fell. In order to protect their future and ensure that their market, was more broadly based, many of the high-technology companies diversified into—yes, defence contracting. They believed that they had developed on the civil side technology that had a military application, for which they could develop a comparable market. Just as they have managed to penetrate that market, it is undergoing a savage contraction.
The Government should consider whether there are any areas in which they could provide a legitimate stimulus, particularly for research and development and for high technology, to ensure that neither the peaceful nor the military applications of the technology are lost because of the sharp contraction in the market.
It has been pointed out to me that we probably have a smaller marine offshore research programme than do most of our major European competitors. France certainly spends a lot more money on marine and offshore research and development, and Germany probably does, too. That

is a shame, in view of our status as an island nation. We ought to be leading the research and development technology for offshore activity, which, I may say, runs well with our naval expertise.
I should like the Minister to consider whether initiatives could be taken jointly by the Department of Trade and Industry and the Ministry of Defence to ensure that the technical expertise and capacity that we have developed in our defence and other high-tech industries are not lost simply because we have had to undergo a contraction that both sides of the House accept is necessary.
I urge the Government to take that idea seriously. If they do not, we may find that, in five or 10 years' time, our already weak high-tech capacity is further weakened because a public spending decision was taken without a full assessment of the implications for our trading and industrial base. I am glad that Ministers from both the DTI and the MOD are here, because it is proper that there should be a joint approach. I urge those two Departments to get together and to give us a long-term idea of a real strategy.

Mr. John Wilkinson (Ruislip-Northwood): Like other hon. Members, I regret that the debate should have to take place against the sombre backdrop of the awful news about Swan Hunter. I should have much preferred a two-day defence debate to take place long since, in which our overall defence equipment and procurement strategy could have been discussed within the general context of defence policy as a whole. Nevertheless, we must accept facts as they are and make the best of them.
At the outset I must declare two interests. One is political, inasmuch as I have the privilege of being on a postgraduate parliamentary industrial fellowship with TI plc, of which Dowty, TI Aerospace, is involved in military business. Secondly, I am a parliamentary adviser to Thorn EMI, which is an important defence contractor.
We shall face a growing squeeze on defence equipment procurement. I suspect that the Ministry of Defence now has the greatest difficulty in concluding its long-term costings and I know that many important programmes are under the severest critical scrutiny. Over the past eight years, the proportion of the defence budget allocated to defence equipment procurement has declined. In 1984–85, the proportion was 45·8 per cent., whereas in 1992–93—the most recent financial year for which I have figures from the Ministry of Defence—it was down to 37·3 per cent. The biggest annual drop, of 2·2 per cent., came between 1991–92 and 1992–93.
It is not surprising, therefore, that there should have been such severe redundancies. The human suffering which has been consequential upon the rundown of our defence industries has been marked, and has been felt not just on Tyneside but right across the country. It has been extremely severe in the south-east, with Rolls-Royce shedding workers at its small engine division at Leavesden, with British Aerospace losing workers from Kingston, Stevenage and Hatfield, and with job losses at Marconi and Thorn EMI. Thousands and thousands of extremely well qualified, dedicated people have lost their jobs and many communities have been hit very hard.
We must also recognise that, with our armed forces decreasing in number, it is more important than ever that we compensate for those reduced numbers by securing the


very best equipment that money can buy—within reason, of course, because a balance has to be struck between quantity and quality. If we go overboard in trying to avoid gold-plating, there will be dangers of the kind that became evident in the Falklands war. The type 21 frigates, built cheap and light, were extremely vulnerable: the aluminium decks burned and the vessels were not as effective as we had hoped. We all remember the awful scenes or HMS Ardent burning in Carlos water.
It is erroneous to suggest that one can lightly forgo naval construction standards in respect of amphibious vessels. The House will remember what happened to Atlantic Conveyor as it carried our helicopters to the scene of the action—we lost most of our Chinooks when Atlantic Conveyor went down—and what happened off Bluff Cove, when the LSL Sir Galahad was attacked. Both vessels were subject to enemy air action.
To say that we need not worry too much about the standards of construction of the LPHs because there will be destroyer screens and so on is to overlook the fact that probably the greatest threat, apart from the submarine threat, will be from enemy air attack, often with stand-off weapons delivered at very great range. I understand why the Government have pursued the path that they have and why VSEL's consortium approach with Kvaerner Govan has found favour, but we must be careful when we seek always to go for the cheapest option.
As I said, the Government face many calls upon their equipment procurement budget. In the past year and a half or so, they have to their credit announced go-aheads for the Merlin helicopter, Challenger 2 tanks, Warrior APCs, Firefly trainers and the advanced short-range air-to-air missile, ASRAAM, among other programmes but there are many pressing projects which merit a go-ahead: the new transport aircraft, either to follow on from the Hercules—the C130J—or the future large aircraft; the support helicopters that the Royal Air Force so badly needs; the attack helicopters for the Army and, I trust, the Royal Marines; multiple-launch rocket system 3 ror our Army; in air-launched stand-off weaponry, the tactical air-to-surface missile and COSM, one nuclear, one conventional; a medium surface to-air missile; and long-range TRIGAT—the third-generation anti-tank guided weapons system. All those projects are bearing down upon a defence budget that is reducing constantly.
If we are to have properly equipped armed forces and defence industries that will be able to secure long-term employment for their dedicated work forces and continue to win-good orders, it will be very important to modify our defence policies to make those resources available. I would advocate greater use of reserves and a steady programme of withdrawal from Germany, if and when the Russians come out of the eastern part of that country. I do not believe that we can afford from any point of view to run down our defence industries further.
I wish to refer specifically to the Navy, which I know is dear to your heart, Madam Deputy Speaker, and which is of great concern to the House. We should not forget that the Navy will have to acquire not only the new LPH but two new LPDs. Those are the sort of vessels that Swan Hunter had an almost unique capability to build. Swan's is the one yard that can build everything from CVSs—aircraft carriers—to corvettes. I know the yard well. My company had the privilege of having it briefly as a client. I know the management team, which has devoted its

livelihood to achieving the management buy-out. I know the work force and the dedication and skill which it has offered to the nation.
I recognise that Swan Hunter ships are regarded as the best in the Royal Navy. No one has supported them through thick and thin, and with greater dedication, greater conviction or more impressively than my hon. Friend the Member for Tynemouth (Mr. Trotter). In the last Navy debate, I was proud to say that I knew of no hon. Member with greater expertise of the naval construction industry than he.
I hope and trust that we will be able to rescue shipbuilding capability on the Tyne. We need it. The Horizon 2000 programme of anti-aircraft frigates must go ahead and eventually we will have to replace our existing Invincible class of aircraft carriers. We will also need more type 23s.
What lessons do I draw from this? I suggest that we need to be more open. I see no reason why we should not have open tendering, as in the United States, for major defence orders. I have said that before, I have written about it in books and I will continue to say it.
If we keep these matters under a wrap of secrecy, it does no one any good; it simply arouses suspicions. The congressional system in the United States allows the relevant committee to have an appropriations function and there is proper democratic oversight and scrutiny. I regret to say that we do not have it in this place.
At least the Americans have been able, through their congressional support, to maintain AV8A and AV8B—the Harriers I and II—in service with the United States marine corps which would not otherwise have happened. In addition, the V22 Osprey continues thanks to congressional support. We do ourselves a disservice by being as secretive as we are.
There is a disparity of £72 million. I have the actual figures and I will not embarrass my hon. Friend the Minister by repeating them. I will study the National Audit Office report with great interest as I have the real figures for VSEL and for Swan Hunter on both bids.
I suspect that the disparity arises from the huge profits that VSEL obtained from the Trident programme. The profits allowed it to pare its overheads. The factors include the differences in construction and the advice that Swan Hunter received from third parties which it hoped would be a party to the programme if the LPH went ahead on the Tyne. There are many factors and they will be revealed by the NAO.
However, in respect of the procurement business, I hope that we will learn the need for open tendering, for proper accountability to the House, for regular defence debates and for a defence procurement strategy that meets the problem of the hour, which is a declining defence budget in real terms with personnel costs that are not reducing and, ultimately, a need to develop a European dimension with the assumption by the Western European Union of the old function of the Independent European Programme Group.
I welcome this timely debate. I cannot support the defence diversification agency as I do not believe that it would do the job that the Opposition believe that it will. However, I hope and pray that my colleagues on the Government Front Bench can obtain the funds from the Treasury which our national defence needs and which our defence industry requires.

Mr. David Jamieson: I am pleased to catch your eye tonight, Madam Deputy Speaker, because this subject is a matter of mutual interest to you and me as Plymouth representatives. I would like to move the debate a little further south and perhaps a little towards the west. Other than from my hon. Friend the Member for South Shields (Dr. Clark), we have heard nothing tonight about Plymouth and the south-west of England.
The south-west of England is the most defence-dependent area of Britain. In 1991, it was estimated that there were 187,000 defence-related jobs in the south-west. That is approximately one in 10 of the total work force.
I have made the point in the House before that Devonport was created for the needs of the Navy. The people came after the Navy. Since King William established the dockyard in 1691, it has had 302 years of service. In addition to defence-related jobs, Plymouth has a large number of service personnel.
It is worth stating in this debate that many people in Plymouth and the south-west have given their lives in conflicts during this century and in the years before it. I am bound to say that many civilians, too, who have worked in defence-related industries have given their lives. I draw testimony from the many widows whose husbands died from working with asbestos in the royal dockyards years ago.
We have lost thousands of jobs in the Devonport dockyard. Many thousands of jobs have been lost in other industries as well. Now we are seeing service personnel in our area lose their jobs. Our motion calls for action to save people who have served their country in one capacity or another from the humiliation of unemployment and the economic scrap heap. Many people who previously worked or currently work in the Devonport dockyard will be saying that Britain must now come to the aid of those who have come to the aid of Britain.
As has been said, Opposition Members accept the need for change. The defence industry, like other industries, must move with the times. Indeed, Devonport dockyard has distinguished itself in recent years by its ability to change, to adapt, to modernise and to diversify into other sectors in which it hitherto did not operate. Unlike the Government, we do not accept that the change in defence needs should automatically mean mass unemployment, skills lost to the economy, and the economic devastation of whole areas to Britain.
I recall the Conservative election promise before the election, which is now looking extremely hollow. I remember that the Conservative party said at the time that Labour's policies would lead to huge job losses in the defence industry. Conservative Members said that defence jobs were safe in their hands. The 8,000 people who have lost their jobs in the Devonport dockyard in the past five years will be asking whose fault it was that they lost their jobs. At the time they had a Tory city council, Tory Devon county council and a Tory Government. It was not the fault of the Labour party.
Since then, the people of Plymouth have had the good sense to realise that they have been betrayed by the Government and now they have a Labour city council. There are more Labour Members on Devonport county

council than Conservatives. Given the chance at the next general election, the south-west will make sure that it has more than one Labour representative.
We have heard some of the reasons why diversification must take place. I would like to consider a range of Ministry of Defence activities in which diversification is needed, not just within the direct defence industries. It is not just a matter of the dockyard. In the 12 months since the election—since we were told that defence jobs would be safe in the hands of the Conservatives—we have had a drip-feed of disaster in Plymouth. The Royal Naval armaments depot in Ernesettle in my constituency is absolutely vital to the back-up work of servicing weapons. We are told now that there is a projected loss of 400 jobs in that establishment.
The Royal Naval engineering college, in which you, Madam Deputy Speaker, have taken great personal interest, and which is in Manadon in my constituency, is the Navy's only university. For more than 50 years it has had a distinguished record of producing engineering graduates of the very highest quality for the Navy. It undertakes postgraduate work that is unavailable elsewhere, serving navies throughout the world, yet we hear that a decision will be made shortly to close the Royal Naval engineering colleges, with a loss of about 300 local jobs. There has been no consultation and no thought of how those jobs might be used in the future.
We have in my constituency the Goshen Yard training school which at one time trained up to 700 engineering apprentices for the dockyard. It is currently run by a company owned by the college of further education in Devonport called Devonport Training for Quality. Now there are just a handful of students in that building. It is unique in the south-west and it contains facilities of huge potential value to other businesses and industry in the region.
Recently, British Rail and South West Water, among other large concerns in the region, have been showing great interest in the training available at the Goschen Yard school. How has the Ministry of Defence reacted to that? Negotiations between Devonport Training for Quality and the Ministry of Defence have been drifting for months. Through sheer frustration, the company has had to impose a deadline of the end of June for the achievement of a long-term lease of the premises.
If negotiations fail, the company will move to other, less suitable premises and the school—with its unique facilities —will be lost to the economy of Plymouth. I ask the Minister to act to ensure that Devonport Training for Quality has a long lease on the premises, to enable vital training work to continue.
Our dockyard in Devonport employs just over 5,000 people; five years ago, it employed 13,500. Its future now hangs on the decision on the Trident nuclear refit contract. The Minister may recall the Secretary of State for Defence saying, in a BBC television programme on 19 August last year:
the decision will be made before Christmas.
Perhaps he can enlighten the House about which Christmas he had in mind.
So concerned were Ministers to secure a decision, as a matter of urgency, that the Minister of State for the Armed Forces—who was present earlier—said on 12 January that he hoped to "make an announcement shortly". That urgency was reflected in last night's Adjournment debate,


when the Minister of State for Defence Procurement was so gripped by anxiety for a swift decision that he regretted that the process had taken
longer than I had hoped."—[Official Report, 18 May 1993; Vol. 225, c. 222.]
This important decision—important, that is, to Plymouth and the south-west and to Scotland—has been subjected to procrastination, fumbling and delay by a Government who have nothing as urgent as "manana" in their lexicon. People in the south-west are asking, "Where is the planning? Where is the strategy? Who is driving the defence changes—the Ministry of Defence or the Treasury?" The thousands who have lost their jobs and the many thousands of loyal workers whose jobs are threatened have the right to an answer.
The Government's defence policy in regard to jobs is in tatters. Even on such important matters as surplus MOD housing, the Government dither while houses are vandalised. Around the country, the Ministry now has 9,291 empty properties, 527 of them in Plymouth—21 per cent. of the total. What has been Ministers' response over the past five years?
Hon. Members on both sides of the House have asked questions. On 24 October 1988, we were told:
Over the next 12 months it is expected that 164 will be offered for sale … sold on the open market."—[Official Report, 24 October 1988; Vol. 139, c. 62.]
On 11 May, we were told:
Many of the vacant properties are undergoing modernisation … others are being prepared for disposal."—[Official Report, 11 May 1989; Vol. 152, c. 522.]
The latest answer in this catalogue is the one that I received on 4 May:
to ensure the early reuse of the dwellings arrangements are now in hand to sell the estate on the open market."—[Official Report, 4 May 1993; Vol. 224, c. 20.]
The Government have certainly proved that procrastination is the art of keeping up with yesterday.
Earlier this evening, the Minister quoted Aneurin Bevan; I hope that he will forgive me if I quote Winston Churchill—not the rather troublesome Winston Churchill who often sits across from me in the Chamber, but one from an earlier era. He said:
They are decided only to be undecided, resolved to be irresolute, adamant for drift, all-powerful for impotence.
Plymouth and the south-west have great potential. The people have many skills; the city council is helping to provide an environment in which new enterprise can flourish and new ideas can develop. However, we desperately need the planning and co-ordination that a diversification agency could bring. At present, the south-west is like a sinking ship with Ministers throwing men overboard without supplying lifeboats. That is why I urge hon. Members to vote for our motion.

Mr. Neville Trotter: The House will not be surprised to hear that I intend to concentrate on the disastrous consequences that have flowed from Swan Hunter not winning the order for the landing platform helicopter carrier, followed by the immediate collapse of that esteemed and proud company. All hon. Members can understand the effect of that awful news on Tyneside.
Swan Hunter had already slimmed to a shadow of its former self but was still a major employer and a proud part of our traditional industrial scene. It is a company of which all on Tyneside have been justly proud for many years. It has a record that is second to none in its

performance in turning out magnificent ships for the Royal Navy, including ships with no defects whatever—senior admirals have told me that that is almost impossible to achieve.
We meet for this debate tonight under a great cloud of sadness at the news that Swan Hunter lost the order. It has closed its doors under its present ownership and a receiver has been appointed. The House will appreciate how our local community has been hit hard in its mind, its soul and its prospects by this tragic news.
Every effort must be made to create alternative economic activity in Wallsend and on Tyneside. We have reason to be hopeful because we have a good record in the north-east of inward investment from abroad. We have experienced regional agencies—there are none better in the United Kingdom—for attracting and using to the utmost the tools that are available for the creation of new employment and new industry. I welcome the new enterprise zone. Such zones have proved successful in other parts of the country and we are determined that the enterprise zone will prove successful for the people of Tyneside, too. We have the assurance of continued regional assistance status which will be helpful to the whole area. Of course, our principal asset is our excellent local labour force.
My main aim tonight is to concentrate on the future of Swan Hunter. In the light of some of the comments made earlier, I shall refer to its recent history for a moment. First, I pay tribute to the yard's great achievements. It has built ships of the highest quality and concentrated recently on warships. The yard tried ceaselessly to obtain export orders—an enormous amount of effort has gone in that direction. Sadly, there was no prospect of success until recently, although ironically at the last minute there was hope of obtaining an order for two ships for Oman. Even in the present circumstances, I hope that it will be possible for Swan Hunter to build those two Omani ships.
I must remind the House that Swan Hunter is still continuing to operate at present, and it would be very good news if it could build those two ships. We are talking about a yard with the highest standard of technology and a first-class design facility which is not bettered anywhere in the country or—I would like to think—in the shipbuilding world.
Recently there has been a steady slimming of the Swan Hunter labour force. I found it interesting to be reminded of these figures. In 1981, there were well over 9,000 people working at Swan Hunter. The number fell steadily over the years to 7,000 in 1984, 4,000 in 1985, then 3,000 and now 2,200 today. Recently, there have been a number of sad blows. We lost the last frigate order. Sadly, we were not second in the competition—we were third. That shows the tremendous competitive pressures in the warship building industry. It is perfectly legitimate for the House to consider whether the possible end of warship building at Swan Hunter unfortunately limits the competition for the future. That negative effect should be borne in mind when we contemplate the ultimate future of Swan Hunter as a warship building unit.
Swan Hunter diversified into building the Antarctic survey vessel. I understand that a large loss' was made on building this superb ship, but I do not know the reason for that. Latterly, the yard ran into severe financial difficulties—that had been the case for some months. At


the end, it was hanging on by its financial fingernails from day to day. It was entirely dependent on that one order, which we all hoped that Swan Hunter would win.
I do not know what the Vickers figures were, but I have been told the Swan Hunter figures. The initial bid was £174 million. I trust that my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) can confirm that figure. The £174 million rose to £210 million. I am sure that my hon. Friend agrees with my figures. I was alarmed when the final bid was increased by £36 million. A question was asked earlier about when the final bid went in. I believe that it happened on 22 April.
It is unfortunate in any bidding process to add a figure of that size to one's bid at the final stage. When the National Audit Office report comes out I shall read with interest the circumstances which required that huge increase in the bid. I fear that it may well have been the final straw.

Mr. Wilkinson: My hon. Friend is enlightening the House on important matters. He is right that the first bid was £174 million. The final bid from Swan Hunter was £210 million, but it was revised upwards to £230 million. There is a suggestion—it may be contradicted—that Ministry of Defence officials were not averse to that upward adjustment. I do not know whether that is true. My hon. Friend may be able to elucidate. However, it was instructive and interesting that from the first to the second bid the VSEL-Kvaerner bid went down, not up.

Mr. Trotter: It is a feature of commercial haggling that one tends to bring one's price down at the final stage to secure the contract. That is why I have in my mind the question about how Swan Hunter was ill advised, required or forced, perhaps by financial pressures—we shall know in due course when the auditor reports—to make an enormous increase of 30 or 40 per cent. in its original bid. I have been given the figure of £210 million as the final bid that was entered.
I was amazed when I heard about the incredibly large difference. Of course there is always a loser and a winner. There is always a difference. But a difference on this scale seemed beyond normal experience. I asked my right hon. Friend the Minister whether I could talk to the Controller of the Navy and he was good enough to agree to that. I received assurances, one of which I relayed to the House this evening, from the controller. His basic assurances were that both yards had been asked to design for the same requirements, and that the Navy was perfectly satisfied with the ship that it was getting. When I asked him about the price, he said that it was in line with the original estimate of the cost to the Navy.
It was not sufficient on an issue of this enormous significance and effect on Tyneside that an individual Member of Parliament should have simply an assurance from the Controller. The Controller is a most honourable man whom I have known and respected for many years. He gave me answers to my questions. It seemed to me that the issue was so great that a formal independent inquiry was required. That is what the directors of Swan Hunter requested.
Therefore, I contacted my hon. Friend the Member for Upminster (Sir N. Bonsor), the Chairman of the Defence Select Committee. He accepted that an emergency meeting

should be held. At that meeting, the members of the Committee, including myself, agreed that an inquiry should be undertaken. We were prepared to undertake the inquiry ourselves if the NAO did not accept our invitation.
It is in everyone's interest that the NAO has accepted the invitation. It is the best qualified body to undertake the inquiry. It has the power to send for all information and all persons. It has expert staff to carry out the inquiry. I know that the whole House and certainly the whole of Tyneside will await its ultimate conclusions with the greatest of interest.
In the light of some of the comments made earlier tonight, it is fitting to say that I am convinced that the ship would never have been built if we had had a Labour Government. There is no doubt in my mind about that. Only a few months ago, the Labour party voted overwhelmingly for a cut of £6 billion or £7 billion a year in defence spending. That is equivalent to the whole cost of the Royal Navy, and about four times what we spend each year on the purchase of ships for the Navy.
The most important matter that I wish to draw to the attention of the House is the immediate and critical decision that the three frigates being built on the Tyne should be completed there. That is essential to the ongoing future of the great skill centre at Swan Hunter. If there is to be any future for that firm, it is essential that those frigates be built there. Yesterday afternoon, I saw my right hon. Friend the Prime Minister in connection with this matter, and I noted his words:
I share the concern of you and everyone on Tyneside that Swan Hunter should be able to complete the type 23 frigates if at all possible. We have that aim very much in mind in our current discussions with the receiver.
I hope that those discussions will be speedy. I understand the complexity of what is involved in renegotiating from the start, but it is essential that the uncertainty on Tyneside be brought to an end as soon as possible. I believe that we can finish those ships to our normal high standards and specifications, and at a better cost than could be achieved by their removal to any other place. I need hardly stress the significance to Tyneside of this decision. The future of Swan Hunter and of its new owners depends entirely on it.
There has been some reference to a takeover of Swan Hunter. It was quite clear that the company could not have continued independently, even if it had obtained the LPH order. Heads of agreement between Swan Hunter and GEC had been signed. If the order had gone to Swan Hunter, GEC would immediately have taken the company over and would presumably have put in the cash that was needed to keep it going. I hope that, even in the present circumstances, we shall still see such a move. GEC is one of our great companies. It has intimate knowledge of the background of the technology and of every other feature of Swan Hunter. It has been through all aspects of the business.
I am told by the receiver that there has been an encouraging number of inquiries about the future of the yard. He can be assured that all hon. Members will give him every possible assistance as he seeks to provide further activity to ensure a future for Swan Hunter. This is a matter of the greatest concern to the people of Tyneside.

Mr. Stephen Byers: In the very brief time available to me I do not want to dwell on the events of last week, but I have to say that the concern that people on Tyneside feel about the way in which the LPH contract was awarded has not been lessened by today's admission of Kvaerner Govan's commercial director, David Smith, that his company tendered for a commercial ship, not a naval vessel. The fact that an LPH carrying Royal Marines into trouble spots will have been built to the same specifications as a passenger ferry must cause great concern among many hon. Members.

Mr. Davidson: Will my hon. Friend give way?

Mr. Byers: As I have only two minutes, I cannot give way.
The sequence of events last week has galvanised the community on Tyneside around a very simple campaign, which has a number of clear and precise objectives. Paramount is the fact that we wish to retain a shipyard and a shipbuilding capacity on the Tyne. If we are to be successful in that regard, it is imperative that we retain the design team. We must retain the technical expertise at Swan Hunter. There must be no steps to declare any of those people redundant until all the options and all the potential buyers have been investigated.
Secondly, the order for the three type 23 frigates, on which work is continuing as normal, must be guaranteed by the Ministry of Defence. Assurances from Ministers —even from the Prime Minister—that the Government will use their best endeavours are not enough; the work must be guaranteed within the next few days.
Thirdly, we know that there are other Ministry of Defence orders in the programme. These should be brought forward as a matter of urgency. Those orders include refits on three landing ships, an AOR3 and a batch of new type 23 frigates. There must be access to intervention funding so that there can be diversification in future into the merchant sector. Help must be given with export orders. A tender went in last Friday for a contract in Oman. I hope that the Government will give all possible assistance to efforts to secure that tender.

Mr. Aitken: We are in touch with the Omani authorities and have been trying to be as helpful as possible to Swan Hunter in receivership.

Mr. Byers: I am grateful for those comments.
Tyneside is not using special pleading, but asking for fair play. Shipbuilding is vital to the manufacturing and industrial base of Tyneside. If the Government thought that the people of Tyneside would sit back and let shipbuilding die, they made a grave error. The survival of shipbuilding is vital to provide jobs for the present and a future for our children. With political will, our objectives can be achieved. The country will be waiting to see what action the Government will take to retain shipbuilding on Tyneside.

Mr. Derek Fatchett: Naturally, much of tonight's debate has centred on the problems facing Swan Hunter and what a number of my hon. Friends have described as the human and commercial tragedy in Tyneside. The sad fact is that, while Swan Hunter makes an immediate focus for tonight's debate, over the past two

or three years there has been a catalogue of defence companies in all regions that have faced exactly the same problems as Swan Hunter.
The list of companies is not a catalogue of doom and gloom, but is crucial in relation to the argument. It contains Swan Hunter, Cammell Laird, VSEL at Barrow —which has lost substantial numbers of jobs even though it won the recent contract—British Aerospace at Kingston upon Thames, British Aerospace in Lancashire, British Aerospace dynamics division in Bristol, Rolls Royce military engines division in Bristol, British Aerospace in Stevenage, GEC Avionics in Kent, the royal ordnance factories in Nottingham and Vickers in Leeds. All those companies have experienced substantial job losses.

Mr. Richards: Will the hon. Gentleman give way?

Mr. Fatchett: No, because we are short of time and we have already heard an intervention from the hon. Gentleman.
The crucial point about each of those companies is that the change in job structure and employment opportunities has not occurred as a result of technological changes as the Minister argued, but as a result of changes in the market place.
The Minister claimed that the Labour party—it could also be said of the Liberals—was trying to advance the argument that the defence industry was "tottering towards the grave". Nothing could be further from the truth. My hon. Friend the Member for South Shields (Dr. Clark) recognised the success, importance, achievements, technology and skills of many of those companies. The Opposition do not want to run down the industries, but advance an argument to show the problems that those companies face in the marketplace.
The list of companies is strategically important to the British industrial base for a variety of reasons, including the fact that a major skills base exists in our defence-related industries, which contain many of our best trained employees. The same is true of shipbuilding and aerospace. I saw a comment last week—I think made by the Minister with responsibility for industry—that some of the arguments in relation to Swan Hunter sounded like those of the 1970s. The Minister is out of touch with the substantial technological changes that have taken place in shipbuilding and does not understand the high level of technology and skills involved in that industry.
When British Aerospace announced 2,000 redundancies at its Kingston plant, according to a survey by the local training and enterprise council 45 per cent. of the laid-off workers were professional and technical staff and another 20 per cent. were skilled craft workers—all of them crucial to the country. Such workers are leaving manufacturing industry because they feel that their skills have been undervalued and their jobs made insecure. I fear that many of them are going into the service industries. So we are losing skills into which a great deal of investment has gone for a number of years. We need those skills for our future industrial performance.
The research and development base is crucial not just to the defence industries but to the spin-offs in the civilian sector. These companies make large investments, often with Government money and often in Government-sponsored research or collaboration projects. If we take


away this base the country will be left lagging behind in R and D and falling even further behind in its ability to compete with Europe.
According to a recent European Commission report, Britain has the second most defence-dependent economy in the EC after France. My hon. Friend the Member for Bolton, South-East (Mr. Young) and the hon. Members for Chelmsford (Mr. Burns) and for Gordon (Mr. Bruce) all arrived at the same conclusion: defence companies must now operate in a changed framework. The collapse of the Soviet Union was an important part of that change. Recalling the defence debates of a few years ago, we may note that the whole object of Conservative defence expenditure was directed at the Soviet Union. I had hoped that the Conservative Members who used that argument would plan for the future. It seems that they now recognise that the Soviet Union has collapsed and that the framework has changed.
Putting aside all petty party political points, the Minister told us—he does not appear to have got the point across to his own Back Benchers—that the Government plan to cut defence expenditure by 9 per cent. in the next three years. Speakers from all parties have agreed on that changed framework.
What do the Government believe they should do in these circumstances? We all recognise the importance of the defence companies, skills and R and D. The crisis encompasses not only our defence capacity but our whole industrial base. The Government's answer is, "Don't bother us; don't ring us; leave it all to the marketplace." We know what happens in the marketplace. The market has been deliberately shrunk by Government action. Our Government and other Governments have reduced their defence budgets.
If we leave the defence industries to the marketplace, it will be a case of Swan Hunter today, other companies tomorrow. The list will continue to grow. The Government are washing their hands of their responsibility. Typically, Conservative Members blame the Government, but will do nothing about the problem.
Defence-related companies have not in any case operated in a free market. They have depended on Government action in all sorts of ways. They have depended on the Government for domestic defence procurement. They have enjoyed what one might term an agreed market, owing to Government action. They have had significant Government funding for research and development and significant Government help with exports. The Government have clearly been involved in the overseas orders won by Britain's defence companies.
The market is not free, because there is direct Government intervention. The Government propose to wash their hands of companies whose success and viability depended on Government intervention, and they are doing that just when those companies need their help.
Some hon. Members, including the hon. Member for Chelmsford were absolutely right when they said that we should take a strategic view. But we all know that markets cannot take a strategic view: they cannot plan ahead. The Government are abdicating their responsibilities and again looking for an opt-out clause. One day it is Maastricht and the social chapter, the next day they opt out of their responsibility for our industrial base.
Other Governments and countries recognise the problems. In opening the debate for the Opposition, my hon. Friend the Member for South Shields (Dr. Clark) spoke about the French, the Germans and the Americans. Those Governments are taking action and recognising the problem. Ours is the only Government who feel that they can abdicate all their responsibilities for those matters.
We are not debating just defence expenditure but the need to protect Britain's industrial base. That is why Labour has demanded intervention and is arguing for a defence diversification agency. The Government must play a role in partnership with companies and employees so that Britain's industrial base can be rebuilt and maintained. No other country would abdicate its responsibility for companies of such importance.
When asked to choose between action to protect our industrial base or inaction, on every occasion the Government and the Minister of State for Defence Procurement choose inaction. That is why I ask my hon. Friends to vote for our motion, because only the Labour party has a strategy for the future and is concerned about our defence industry and our industrial strategy.

The Minister for Industry (Mr. Tim Sainsbury): I welcome this debate, and also welcome the hon. Member for Leeds, Central (Mr. Fatchett) back to it. I am sorry that he missed so many of the contributions.
The debate has brought out some of the positive aspects of changes in the defence market, as well as some of the inevitable disadvantages. Not for the first time, the incoherence of Labour policy on defence has been revealed.
We all know that the end of the cold war means that the United Kingdom's defence spending can decline by about 3 per cent. a year for the next three or four years. The effect of that on companies in the defence industry and on the areas in which they are located will vary. On the positive side, as my hon. Friend the Minister of State for Defence Procurement said, competitive procurement has helped our defence industrial base to become one of the most efficient and successful in the world. It would be nice to have that recognised more fully by the Opposition.

Mr. Ian Bruce: Is my right hon. Friend rather surprised that throughout the debate, the thrust of which has been about policy to help Tyneside, no one has mentioned the fact that the defence diversification agency, which was suggested by the Opposition, was rejected by the Select Committee on Employment which looked at that issue? The three measures that the Government have announced were those that the Select Committee report advocated in the context of the Government and enterprise agencies.

Mr. Sainsbury: My hon. Friend makes an effective point; I shall speak later about the concept of a defence conversion agency.
Our defence industrial base is, as my hon. Friend the Minister of State for Defence Procurement said, proving its competitiveness in the international markets. The success of our exports, which have increased two and a half times since the mid-1980s, is evidence or that, as is the fact that we are now the second-largest exporter, having overtaken France in the past few years. Defence is a net contributor to the balance of payments and sustains about


120,000 jobs through exports. Last year, the total value of export contracts signed was about £5 billion, a record level for our defence industry.
During the debate, a number of ideas have been put forward and a number of schemes have been mentioned, and I want to say something about some of them. My hon. Friend the Member for Chelmsford (Mr. Burns) drew attention to a scheme called KONVER, which is the latest in a series of Community structural fund initiatives, prepared by the EC Commission with the intention of addressing the problems of a specific industry.
The Government object strongly to such schemes in general, since they take such a partial approach to industrial adjustment. We object to KONVER in particular because of the mismatch between the areas where there are or may be job losses in the defence industry and the objective 2 and 5b areas which may be the only areas eligible for support.
Another serious deficiency in the scheme is the level of our allocation. It fails to reflect the importance of our defence manufacturing. We are making a forceful representation to the Commission about the way in which the funds are apparently being allocated. However, I agree with my hon. Friend that, if there is to be a scheme, it would be foolish not to take advantage of it. I hope that member states' KONVER programmes will be approved by September and we shall obviouly proceed if we get that approval.

Mr. Nicholas Brown: Will the Minister give way?

Mr. Sainsbury: No, there is no time to give way.
I come now to the important matter of Swan Hunter. The past achievements and the present plight of Swan Hunter were described most eloquently by my hon. Friend the Member for Tynemouth (Mr. Trotter). I shall say something first about claims which it has been suggested are a problem. It has been said that the Ministry of Defence owes Swan Hunter money. The Ministry of Defence has been scrupulous in making timely payments to the company, both on the AOR and on the type 23 frigate contracts, in full accordance with the terms of those contracts. The Ministry of Defence does not accept that it owes the company money.
Swan Hunter has made a claim for losses that it says it incurred on the replenishment vessel AOR2. That is a complex matter which the Ministry of Defence has been assessing as quickly as possible. It has been unable to accept some of the claim, but has made interim payments totallirt no less than £8 million. I remind the House that the Ministry of Defence has obligations under the Insolvency Act 1986 and it could not responsibly have paid any more at this time. I confirm to my hon. Friend the Member for Tynemouth that the best and final offer date was, as he said, 22 April 1993.
Let me say something briefly in the time available about our response to what we are well aware to be serious consequences for Tyneside of the receivership of Swan Hunter. We recognise that this is a blow to those employed in the yard, their families, the local suppliers and the whole community, particularly in view of the yard's long and distinguished history as a warship builder.
My Department is keeping in close touch with the receiver to see that prospects for maintaining some engineering or shipbuilding-related activities are fully explored. We shall also be doing all we can to see that new

jobs are brought to the area. I announced last week a package of additional measures to help attract new investment and new jobs. In the time available, I shall not rehearse them this evening, but attracting new inward investment will be important. It is lucky that the region has a good record on that. Some good inward investment projects are in prospect, and my Department and the Northern Development Company are pursuing them energetically for the north-east.
Opposition Members were dismissive of a package of measures such as that which I describe. Enterprise zones and other special regional initiatives have been most successful in helping to attract new investment in the wake of closures—[HON. MEMBERS: "In Sunderland?"] I will come to Sunderland in a moment, if members of the Opposition Front Bench will refrain from sedentary interventions.
Corby is an excellent example. There, 3,500 steel jobs were lost, but since then 13,000 jobs have been created. The Gateshead zone attracted substantial private sector investment and 2·75 million sq ft of new space—mainly industrial—has been produced. At Consett, 3,500 jobs were lost, but 4,000 replacement jobs were created.
As to Sunderland, the Government's special package of measures announced in 1988 resulted in the creation of 3,750 jobs. It can be done—and, I am happy to say, all concerned will be pulling together to see that it is done. Local partnerships are vital. There is an excellent record of co-operation in the north-east on which to build.
We heard a lot about defence conversion. We should talk not about conversion but about diversification, because that is a more realistic and useful objective. We are talking about firms building on their enormous technological skills and know-how, to increase their penetration of civilian markets. Related diversification has succeeded in reducing many firms' dependency on defence, from something like 100 per cent. to nearer 70 per cent. My hon. Friend the Member for Chelmsford gave examples of achievements by Marconi—an important company in his constituency.
I remind the House of the measures that we take to help companies. We encourage innovation. We have the enterprise initiative and training and enterprise councils are giving particularly useful help to firms with counselling, information and advice, training and business skills. More specifically, my Department supports company efforts to diversify through the series of "Changing Tack" regional seminars held over the past year to highlight diversification possibilities.
My hon. Friend the Minister of State for Defence Procurement asked pertinent questions about the Opposition's proposal for a defence conversion agency. What would it do? What is it meant to do? How would it undertake its task? If subsidies were to be involved, how compatible would they be with the level playing field that the Opposition always seek? From where would the money come? I share the scepticism expressed by my hon. Friend the Member for Ruislip-Norwood (Mr. Wilkinson).
At the end of this debate, we are no wiser as to what that agency would do. I am reminded of King Lear's words:
I will do such things—
What they are yet, I know not.
We are in the same position in respect of the defence conversion agency.
The debate exposed the absurdity of Labour's proposal for such an agency—son of the National Enterprise Board, if ever there was one. It reveals once again the depth of Labour's lack of understanding of how to help British industry become more competitive and better able to create sustained employment. It has exposed something more—the hypocrisy of a party that consistently voted for massive reductions in defence spending, but then cynically complains about potential job losses in the very defence industries that Labour's policies would decimate.
That is a typical example of political expediency from a party that does not have the courage to face the facts and tell its supporters the truth. The motion was put before the House tonight for one purpose only—to get the Labour party off the hook.
Nor do we need reminders about the shamefaced shambles that characterises Liberal Democrat policy. Or should I say policies, because that party has as many policies as it has members—and a different lot for tomorrow. It puts me in mind of Kipling's couplet:
There are nine and sixty ways
Of constructing tribal lays,
And every single one of them is right.
The trouble with Liberal policies is that most of them are left and all of them are wrong.
I commend the amendment to the motion to the House. The Labour party has had 14 years of irresponsibility over defence policy. It has not learnt. It still sees phantom orders for phantom ships pursuing phantom enemies.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 263, Noes 304.

Division No. 276]
[10 pm


AYES


Abbott, Ms Diane
Campbell, Menzies (Fife NE)


Adams, Mrs Irene
Campbell, Ronnie (Blyth V)


Ainger, Nick
Campbell-Savours, D. N.


Ainsworth, Robert (Cov'try NE)
Canavan, Dennis


Allen, Graham
Carlile, Alexander (Montgomry)


Alton, David
Chisholm, Malcolm


Anderson, Ms Janet (Ros'dale)
Clapham, Michael


Ashdown, Rt Hon Paddy
Clark, Dr David (South Shields)


Ashton, Joe
Clarke, Eric (Midlothian)


Austin-Walker, John
Clarke, Tom (Monklands W)


Banks, Tony (Newham NW)
Clelland, David


Barnes, Harry
Clwyd, Mrs Ann


Barron, Kevin
Coffey, Ann


Battle, John
Cohen, Harry


Bayley, Hugh
Connarty, Michael


Beckett Rt Hon Margaret
Cook, Frank (Stockton N)


Beith, Rt Hon A. J.
Cook, Robin (Livingston)


Benn, Rt Hon Tony
Corbett, Robin


Bennett, Andrew F.
Corbyn, Jeremy


Benton, Joe
Corston, Ms Jean


Bermingham, Gerald
Cousins, Jim


Berry, Dr. Roger
Cryer, Bob


Betts, Clive
Cummings, John


Blunkett, David
Cunliffe, Lawrence


Boateng, Paul
Cunningham, Jim (Covy SE)


Boyce, Jimmy
Cunningham, Rt Hon Dr John


Boyes, Roland
Dafis, Cynog


Bradley, Keith
Darling, Alistair


Bray, Dr Jeremy
Davidson, Ian


Brown, Gordon (Dunfermline E)
Davies, Bryan (Oldham C'tral)


Brown, N. (N'c'tle upon Tyne E)
Davies, Rt Hon Denzil (Llanelli)


Bruce, Malcolm (Gordon)
Davies, Ron (Caerphilly)


Burden, Richard
Davis, Terry (B'ham, H'dge H'l)


Byers, Stephen
Denharn, John


Callaghan, Jim
Dewar, Donald


Campbell, Mrs Anne (C'bridge)
Dixon, Don





Donohoe, Brian H.
Lewis, Terry


Dowd, Jim
Litherland, Robert


Dunnachie, Jimmy
Livingstone, Ken


Dunwoody, Mrs Gwyneth
Lloyd, Tony (Stretford)


Eagle, Ms Angela
Llwyd, Elfyn


Eastham, Ken
Loyden, Eddie


Enright, Derek
Lynne, Ms Liz


Etherington, Bill
McAllion, John


Evans, John (St Helens N)
McAvoy, Thomas


Ewing, Mrs Margaret
McCartney, Ian


Fatchett, Derek
Macdonald, Calum


Faulds, Andrew
McKelvey, William


Field, Frank (Birkenhead)
McLeish, Henry


Fisher, Mark
McMaster, Gordon


Flynn, Paul
McWilliam, John


Foster, Rt Hon Derek
Madden, Max


Foster, Don (Bath)
Mahon, Alice


Foulkes, George
Mandelson, Peter


Fraser, John
Marek, Dr John


Fyfe, Maria
Marshall, David (Shettleston)


Gapes, Mike
Marshall, Jim (Leicester, S)


Garrett, John
Martin, Michael J. (Springburn)


George, Bruce
Martlew, Eric


Gerrard, Neil
Maxton, John


Gilbert, Rt Hon Dr John
Meacher, Michael


Godman, Dr Norman A.
Meale, Alan


Godsiff, Roger
Michael, Alun


Golding, Mrs Llin
Michie, Bill (Sheffield Heeley)


Gordon, Mildred
Michie, Mrs Ray (Argyll Bute)


Gould, Bryan
Milburn, Alan


Graham, Thomas
Miller, Andrew


Grant, Bernie (Tottenham)
Moonie, Dr Lewis


Griffiths, Nigel (Edinburgh S)
Morgan, Rhodri


Griffiths, Win (Bridgend)
Morley, Elliot


Grocott, Bruce
Morris, Rt Hon A. (Wy'nshawe)


Gunnell, John
Morris, Estelle (B'ham Yardley)


Hain, Peter
Morris, Rt Hon J. (Aberavon)


Hall, Mike
Mowlam, Marjorie


Hanson, David
Mudie, George


Hardy, Peter
Murphy, Paul


Harman, Ms Harriet
Oakes, Rt Hon Gordon


Harvey, Nick
O'Brien, William (Normanton)


Hattersley, Rt Hon Roy
O'Hara, Edward


Henderson, Doug
Olner, William


Heppell, John
O'Neill, Martin


Hill, Keith (Streatham)
Orme, Rt Hon Stanley


Hinchliffe, David
Parry, Robert


Hoey, Kate
Patchett, Terry


Hogg, Norman (Cumbernauld)
Pendry, Tom


Home Robertson, John
Pickthall, Colin


Hood, Jimmy
Pike, Peter L.


Hoon, Geoffrey
Powell, Ray (Ogmore)


Howarth, George (Knowsley N)
Prentice, Ms Bridget (Lew'm E)


Howells, Dr. Kim (Pontypridd)
Prentice, Gordon (Pendle)


Hoyle, Doug
Prescott, John


Hughes, Kevin (Doncaster N)
Primarolo, Dawn


Hughes, Robert (Aberdeen N)
Purchase, Ken


Hughes, Roy (Newport E)
Quin, Ms Joyce


Hutton, John
Radice, Giles


Illsley, Eric
Randall, Stuart


Ingram, Adam
Raynsford, Nick


Jackson, Glenda (H'stead)
Redmond, Martin


Jackson, Helen (Shef'ld, H)
Reid, Dr John


Jamieson, David
Rendel, David


Janner, Greville
Robertson, George (Hamilton)


Jones, Barry (Alyn and D'side)
Robinson, Geoffrey (Co'try NW)


Jones, Ieuan Wyn (Ynys Môn)
Rogers, Allan


Jones, Jon Owen (Cardiff C)
Rooker, Jeff


Jones, Lynne (B'ham S O)
Rooney, Terry


Jones, Martyn (Clwyd, SW)
Ross, Ernie (Dundee W)


Jones, Nigel (Cheltenham)
Rowlands, Ted


Jowell, Tessa
Ruddock, Joan


Kaufman, Rt Hon Gerald
Sedgemore, Brian


Keen, Alan
Sheerman, Barry


Kennedy, Jane (Lpool Brdgn)
Sheldon, Rt Hon Robert


Khabra, Piara S.
Shore, Rt Hon Peter


Kilfoyle, Peter
Short, Clare


Kirkwood, Archy
Simpson, Alan


Leighton, Ron
Skinner, Dennis


Lestor, Joan (Eccles)
Smith, Andrew (Oxford E)






Smith, C. (Isl'ton S & F'sbury)
Wareing, Robert N


Smith, Llew (Blaenau Gwent)
Watson, Mike


Snape, Peter
Wicks, Malcolm


Soley, Clive
Wigley, Dafydd


Spearing, Nigel
Williams, Rt Hon Alan (Sw'n W)


Steel, Rt Hon Sir David
Williams, Alan W (Carmarthen)


Steinberg, Gerry
Wilson, Brian


Stevenson, George
Winnick, David


Stott, Roger
Wise, Audrey


Strang, Dr. Gavin
Worthington, Tony


Straw, Jack
Wray, Jimmy


Taylor, Mrs Ann (Dewsbury)
Wright, Dr Tony


Taylor, Matthew (Truro)
Young, David (Bolton SE)


Tipping, Paddy



Tyler, Paul
Tellers for the Ayes:


Vaz, Keith
Mr. John D. Taylor and


Walker, Rt Hon Sir Harold
Mr. Dennis Turner.


Wardell, Gareth (Gower)





NOES


Ainsworth, Peter (East Surrey)
Coombs, Simon (Swindon)


Aitken, Jonathan
Cope, Rt Hon Sir John


Alexander, Richard
Cormack, Patrick


Alison, Rt Hon Michael (Selby)
Couchman, James


Allason, Rupert (Torbay)
Cran, James


Amess, David
Currie, Mrs Edwina (S D'by'ire)


Ancram, Michael
Curry, David (Skipton & Ripon)


Arbuthnot, James
Davies, Quentin (Stamford)


Arnold, Jacques (Gravesham)
Davis, David (Boothferry)


Arnold, Sir Thomas (Hazel Grv)
Day, Stephen


Ashby, David
Deva, Nirj Joseph


Aspinwall, Jack
Devlin, Tim


Atkinson, David (Bour'mouth E)
Dickens, Geoffrey


Atkinson, Peter (Hexham)
Dorrell, Stephen


Baker, Rt Hon K. (Mole Valley)
Douglas-Hamilton, Lord James


Baker, Nicholas (Dorset North)
Dover, Den


Baldry, Tony
Duncan, Alan


Banks, Matthew (Southport)
Duncan-Smith, Iain


Banks, Robert (Harrogate)
Dunn, Bob


Bates, Michael
Durant, Sir Anthony


Batiste, Spencer
Dykes, Hugh


Bellingham, Henry
Eggar, Tim


Beresford, Sir Paul
Elletson, Harold


Biffen, Rt Hon John
Emery, Rt Hon Sir Peter


Blackburn, Dr John G.
Evans, David (Welwyn Hatfield)


Body, Sir Richard
Evans, Jonathan (Brecon)


Bonsor, Sir Nicholas
Evans, Nigel (Ribble Valley)


Booth, Hartley
Evans, Roger (Monmouth)


Boswell, Tim
Evennett, David


Bottomley, Peter (Eltham)
Faber, David


Bottomley, Rt Hon Virginia
Fabricant, Michael


Bowden, Andrew
Fenner, Dame Peggy


Bowis, John
Field, Barry (Isle of Wight)


Boyson, Rt Hon Sir Rhodes
Fishburn, Dudley


Brandreth, Gyles
Forman, Nigel


Brazier, Julian
Forsyth, Michael (Stirling)


Bright, Graham
Fowler, Rt Hon Sir Norman


Brooke, Rt Hon Peter
Fox, Dr Liam (Woodspring)


Brown, M. (Brigg & Cl'thorpes)
Fox, Sir Marcus (Shipley)


Browning, Mrs. Angela
Freeman, Roger


Bruce, Ian (S Dorset)
French, Douglas


Budgen, Nicholas
Fry, Peter


Burns, Simon
Gale, Roger


Burt, Alistair
Gallie, Phil


Butcher, John
Gardiner, Sir George


Butler, Peter
Garel-Jones, Rt Hon Tristan


Butterfill, John
Garnier, Edward


Carlisle, John (Luton North)
Gill, Christopher


Carlisle, Kenneth (Lincoln)
Gillan, Cheryl


Carrington, Matthew
Goodson-Wickes, Dr Charles


Carttiss, Michael
Gorman, Mrs Teresa


Cash, William
Gorst, John


Channon, Rt Hon Paul
Grant, Sir Anthony (Cambs SW)


Churchill, Mr
Greenway, Harry (Ealing N)


Clappison, James
Griffiths, Peter (Portsmouth, N)


Clifton-Brown, Geoffrey
Grylls, Sir Michael


Coe, Sebastian
Gummer, Rt Hon John Selwyn


Colvin, Michael
Hague, William


Congdon, David
Hamilton, Rt Hon Archie (Epsom)


Conway, Derek
Hamilton, Neil (Tatton)





Hampson, Dr Keith
Nelson, Anthony


Hanley, Jeremy
Neubert, Sir Michael


Hannam, Sir John
Newton, Rt Hon Tony


Hargreaves, Andrew
Nicholls, Patrick


Harris, David
Nicholson, David (Taunton)


Haselhurst, Alan
Nicholson, Emma (Devon West)


Hawkins, Nick
Norris, Steve


Hawksley, Warren
Onslow, Rt Hon Sir Cranley


Hayes, Jerry
Oppenheim, Phillip


Heald, Oliver
Ottaway, Richard


Heathcoat-Amory, David
Page, Richard


Hendry, Charles
Paice, James


Hicks, Robert
Patnick, Irvine


Higgins, Rt Hon Sir Terence L.
Patten, Rt Hon John


Hill, James (Southampton Test)
Pattie, Rt Hon Sir Geoffrey


Horam, John
Pawsey, James


Hordern, Rt Hon Sir Peter
Peacock, Mrs Elizabeth


Howard, Rt Hon Michael
Pickles, Eric


Howarth, Alan (Strat'rd-on-A)
Porter, Barry (Wirral S)


Howell, Rt Hon David (G'dford)
Porter, David (Waveney)


Howell, Ralph (North Norfolk)
Portillo, Rt Hon Michael


Hughes Robert G. (Harrow W)
Powell, William (Corby)


Hunt, Rt Hon David (Wirral W)
Redwood, John


Hunt, Sir John (Ravensbourne)
Renton, Rt Hon Tim


Hunter, Andrew
Richards, Rod


Jack, Michael
Riddick, Graham


Jackson, Robert (Wantage)
Robathan, Andrew


Jenkin, Bernard
Roberts, Rt Hon Sir Wyn


Jessel, Toby
Robertson, Raymond (Ab'd'n S)


Johnson Smith, Sir Geoffrey
Robinson, Mark (Somerton)


Jones, Gwilym (Cardiff N)
Roe, Mrs Marion (Broxbourne)


Jones, Robert B. (W Hertfdshr)
Rowe, Andrew (Mid Kent)


Jopling, Rt Hon Michael
Rumbold, Rt Hon Dame Angela


Kellett-Bowman, Dame Elaine
Ryder, Rt Hon Richard


Key, Robert
Sackville, Tom


King, Rt Hon Tom
Sainsbury, Rt Hon Tim


Kirkhope, Timothy
Scott, Rt Hon Nicholas


Knapman, Roger
Shaw, David (Dover)


Knight, Mrs Angela (Erewash)
Shaw, Sir Giles (Pudsey)


Knight, Greg (Derby N)
Shephard, Rt Hon Gillian


Knox, David
Shepherd, Colin (Hereford)


Kynoch, George (Kincardine)
Shepherd, Richard (Aldridge)


Lait, Mrs Jacqui
Shersby, Michael


Lamont, Rt Hon Norman
Sims, Roger


Lang, Rt Hon Ian
Skeet, Sir Trevor


Legg, Barry
Smith, Sir Dudley (Warwick)


Leigh, Edward
Smith, Tim (Beaconsfield)


Lennox-Boyd, Mark
Soames, Nicholas


Lester, Jim (Broxtowe)
Spencer, Sir Derek


Lidington, David
Spicer, Sir James (W Dorset)


Lilley, Rt Hon Peter
Spicer, Michael (S Worcs)


Lloyd, Peter (Fareham)
Spink, Dr Robert


Lord, Michael
Spring, Richard


Luff, Peter
Sproat, Iain


MacGregor, Rt Hon John
Squire, Robin (Hornchurch)


MacKay, Andrew
Stanley, Rt Hon Sir John


Maclean, David
Steen, Anthony


McLoughlin, Patrick
Stephen, Michael


McNair-Wilson, Sir Patrick
Stern, Michael


Madel, David
Stewart, Allan


Maitland, Lady Olga
Streeter, Gary


Malone, Gerald
Sumberg, David


Mans, Keith
Sweeney, Walter


Marland, Paul
Sykes, John


Marlow, Tony
Tapsell, Sir Peter


Marshall, John (Hendon S)
Taylor, Ian (Esher)


Martin, David (Portsmouth S)
Taylor, John M. (Solihull)


Mates, Michael
Taylor, Sir Teddy (Southend, E)


Mawhinney, Dr Brian
Temple-Morris, Peter


Mellor, Rt Hon David
Thomason, Roy


Merchant, Piers
Thompson, Sir Donald (C'er V)


Milligan, Stephen
Thompson, Patrick (Norwich N)


Mills, Iain
Thornton, Sir Malcolm


Mitchell, Andrew (Gedling)
Thurnham, Peter


Mitchell, Sir David (Hants NW)
Townend, John (Bridlington)


Moate, Sir Roger
Townsend, Cyril D. (Bexl'yh'th)


Monro, Sir Hector
Tracey, Richard


Montgomery, Sir Fergus
Tredinnick, David


Moss, Malcolm
Trend, Michael


Needham, Richard
Trotter, Neville






Twinn, Dr Ian
Widdecombe, Ann


Vaughan, Sir Gerard
Wiggin, Sir Jerry


Viggers, Peter
Wilkinson, John


Waldegrave, Rt Hon William
Willetts, David


Walden, George
Winterton, Mrs Ann (Congleton)


Walker, Bill (N Tayside)
Winterton, Nicholas (Macc'f'ld)


Waller, Gary
Wolfson, Mark


Wardle, Charles (Bexhill)
Wood, Timothy


Waterson, Nigel
Yeo, Tim


Watts, John
Young, Sir George (Acton)


Wells, Bowen



Wheeler, Rt Hon Sir John
Tellers for the Noes:


Whitney, Ray
Mr. David Lightbown and


Whittingdale, John
Mr. Sydney Chapman.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
`That this House recognises with gratitude the efforts and skills over the years of all workers in the defence industries who have ensured that the United Kingdom's security has been maintained with the best of equipment and weapons; notes that the policy of competition for defence orders adopted by Her Majesty's Government has resulted in an efficient United Kingdom defence industry with world-class export performance; condemns the 25 per cent. defence cuts demanded by the Labour Party Conference which would cripple Britain's armed forces and her defence industry; rejects the idea of a Defence Diversification Agency to second-guess business decisions that should more properly be taken by companies; but welcomes the assistance provided by Her Majesty's Government to help regions to adjust more effectively to major industrial change by creating opportunities for new industries, as exemplified by the wide-ranging package of measures announced last week for Tyneside.'.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Orders on Statutory Instruments, &c.).

INSURANCE

That the draft Insurance Companies (Cancellation) Regulations 1993, which were laid before this House on 19th April, be approved.—[Mr. Arbuthnot.]

Question agreed to.

Petrol Stations (Leakage)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Arbuthnot.]

Mr. Colin Pickthall: I am grateful for the opportunity to draw the attention of the House to some of the problems relating to petrol leakage from storage tanks in garages throughout the country. I apologise to the Minister for keeping him late, but I am sure that he will find the matter of some interest.
In my constituency, there have been three serious leakages of petrol from garage storage tanks, involving many hundreds of gallons of fuel, in the past 12 months. In one case, on County road in Ormskirk, the problem, although serious, was tackled efficiently because a large company—Esso—was the owner. I am informed that, where large companies such as Esso or Shell are involved, the lines of responsibility are clear, the pollution is tackled correctly and the polluter pays. However, in the case of the other two leakages, the garages were small companies and the problems were more acute.
In one case, on the A59 in Rufford village, the petrol leaked through the drains under the trunk road and into the cellars of the Hesketh Arms on the opposite side of the road. I am sure that the Minister will agree that it is not petrol that one wants to find in the cellars of a pub. The potential tragedy in such a situation is not hard to imagine. In that case, the local authorities moved rapidly to neutralise the danger.
The third incident encapsulates all the problems that I want to bring to the Government's attention. Almost 12 months ago, a severe leakage of petrol was detected from Church garage on the A570 in Scarisbrick. The pollution from that leakage covered 20,000 sq m. It contaminated 2,000 cu m of soil and 500 cu m of water. The leakage passed into and under adjacent houses and, through the drains under the trunk road, to houses opposite. The cellar of an old vicarage nearby was filled with a mixture of petrol and water, and I believe that about 150 gallons of petrol were taken from the cellar. The owners of the old vicarage, the Kennedy family, who have spent everything they have on refurbishing the building, are now devastated to find that their property is virtually worthless. The same applies to several other home owners in the vicinity.
I am indebted to David Pirret, the general manager of Shell UK retail division, who made a clear analysis of such problems in a speech on 29 April. He said:
The fragmentation that now exists at local and regional level; and the widely differing levels of technical understanding; make any meaningful dialogue extremely difficult.
In the Scarisbrick case, the garage owner, faced with tremendous costs, put his business into liquidation. For any business of that size, the identification of statutory nuisance and the threat of the serving of an abatement order, are almost bound to lead to liquidation. That means that there is no company on which to serve the abatement order.
We then move into the question of responsibility. That is shared between several bodies. The first is the district council—in this case, West Lancashire district council—as the environment health authority. West Lancashire has already spent about £60,000 on monitoring and testing, which is a substantial slice of its total capped budget of £9·2 million.
The county council is responsible for licensing through the petroleum officer—in this case, the fire brigade—and it is also responsible as agent for the trunk road under which the petrol leaked through the drains. The Department of Transport is ultimately responsible for the trunk road itself, and the National Rivers Authority became partly responsible, because the petrol leaked for a while into a small watercourse. In other cases, I believe that the water board and local planning authorities have also had responsibilities.
The garage's insurance policy appears to cover only unexpected immediate leakages. The Scarisbrick leak seems to have been going on for some time. Some petrol was found to be fresh, while other petrol had broken down. It may therefore prove impossible to establish insurance liability.
To dig out the affected land would cost up to £250,000, according to the district council. Clearly, the district council cannot afford that. It becomes an awkward question of judgment for the authorities which must assess the risk involved in such pollution with cost very much in mind.
Lancashire county council and West Lancashire district council assess the risk now as small. However, only three or four weeks ago, vapour levels again rose dramatically, probably due to the petrol underground rising on the surface of water. The land there lies on a clay layer, which is virtually impervious.
While both local authorities are doing their job properly, they cannot tack le the problem faced by the neighbouring householders who have seen the value of their houses reduced to nothing. Yesterday, Mrs. Kennedy informed me that her insurance company had informed her that it now refused cover for her house. I am sure that the other people who have been affected, including Mr. and Mrs. Chisnall next door but two and the Reverend Mr. Goode who inhabits the new rectory, have identical problems.
That is the immediate personal crisis for several of my constituents that I would like the Minister to consider. They are ordinary citizens who, through absolutely no fault of their own, find themselves possibly ruined. Although they are personally protected from danger by the local authorities—at least, I hope so—they are unable at the moment to seek compensation from a company which has gone into liquidation. They also face insufficient insurance cover.
In those cases, the polluter does not and cannot pay. that is just one example. A Salford university student, David "Watson, recently produced a study which showed that there were more than 280 cases of leakages from storage tanks across the country, although over an unspecified period of years. Petroleum officers informed our local authorities of 216 cases in the past 12 months in just 29 local authorities, and 54 cases were assessed as fire hazards. In Warrington, there was a case in which 17,000 gallons were spilled in that manner. The worst case was in the constituency of the Leader of the House, the right hon. Member for Braintree (Mr. Newton) and involved between 20,000 and 25,000 gallons.
The Minister will appreciate that the country is threaded by pipes, culverts and underground watercourses which can transport petrol or vapour in unforeseen and even undetected directions. In the Scarisbrick case, it was found that petrol had been leaking through an old culvert under a nearby church, the church of St. Mark, and close

to a nearby primary school. It makes me shudder to think that only a couple of miles up the road is Martin Mere, the country's second largest wetland bird sanctuary. If petrol had got into that area, there would have been a different disaster.
David Pirret from Shell reports that between 30 and 40 per cent. of United Kingdom petrol filling stations have problems and that those problems centre on suction lines—that accounts for 90 per cent. of the total—the flexipipes on the pumps, single-skin tanks—the one at County road turned out to have quite a hole in it when it was dug out—and the absence of a proper monitoring system of tank space, overfill prevention and vapour recovery systems. He also makes a point that I wish to emphasise; the problem is more likely to arise in rural sites, which tend to be older. The Minister's constituency, which I know extremely well, contains many garages which might present a hazard at some point in future.
In the case of Shell, a renovation programme is in process—replacing single-skin with double-skin tanks, replacing metal suction lines with plastic suction lines, putting check valves on pumps and, perhaps most important, installing sensitive tank monitoring systems which he says could detect a teacup of oil disappearing. In the cases that I am talking about, several hundred, if not thousands, of gallons have disappeared undetected for a long time. The costs of all that for Shell are vast, and could be undertaken only by large companies. It is not a solution for a small company.
I hope that the problems are clear, and I shall conclude by putting the key points to the Minister. Is it possible to legislate for unambiguous insurance policies which cover the total cost of pollution from leaks? Is it possible to have tighter monitoring, more frequent monitoring and inspection? Is it possible to tighten up the licensing process?
At present, there is only annual relicensing. The local authority can require inventory checks, but it is not obliged to, and after the first installation of storage tanks, the next inspection does not have to be undertaken for 20 years. Is it possible to simplify the range of responsible authorities? How can help be given to small local authorities in particular when they face crises that they cannot fund?
Am I pessimistic in my assumption that, if proper and sufficient regulations are fully implemented, the logical conclusion will be that small garages become completely non-viable and only the big chains will have the resources to protect the environment, as Shell is trying to do? Of course, most important, how can my constituents who face appalling domestic calamity be helped out of the hole into which they have undeservedly been thrust? The Minister will appreciate that, because of the time, I have not ventured into the decommissioning of sites and the existence of abandoned storage tanks, but enough problems have been aired for one evening, and I am grateful for his attention.

Mr. Mike Hall: rose—

Mr. Deputy Speaker (Mr. Michael Morris): Order. Does the hon. Gentleman have the permission of the hon. Member for Lancashire, West (Mr. Pickthall)?

Mr. Pickthall: Yes.

Mr. Hall: I am grateful to my hon. Friend the Member for Lancashire, West (Mr. Pickthall) for initiating this important debate. I am grateful also to the Minister for allowing me a couple of minutes of his precious time to add to some of the points that my hon. Friend has made.
My hon. Friend referred to the work of David Watson, who works for the environmental health department of Warrington borough council. I commend it to the Minister, as it encapsulates all the problems that my hon. Friend outlined. One problem is that, when petrol leaks from petrol station tanks, it spoils the environment in several ways. It gets into the soil and into the local environment; it can get into water courses and end up in sewers. The problem is that, if 1 per cent. of the natural atmosphere is affected, it is then a flammable atmosphere, while if up to 8 per cent. is affected, the atmosphere becomes explosive. The report refers to a number of such incidents; I shall refer briefly to three.
The report—a statement of qualification experience prepared for Warrington borough council—mentions, for instance, an incident in Lincolnshire in which a petrol station leak put 5,000 litres of petrol into the surrounding area. It threatened the water supply of a local hospital. In another instance, vapour levels in the basement of an adjoining cottage reached explosive levels. In Warwickshire, in the west midlands, after a long-term leak from a petrol station, a number of adjacent properties were affected. That is just a small sample.
My hon. Friend the Member for Lancashire, West has mentioned two major issues involving Warrington, part of which I represent. The principal problem is the number of agencies involved in trying to clean up after the leaks. First, there is the petroleum officer, who registers petrol stations and retains responsibility while they are still operating. If a station goes out of business, the petroleum officer's role ends, as he has no off-site monitoring powers. An officer can be appointed by the fire brigade; he can also be a member of the trading standards authority. In Scotland, he may even be a member of the local authority. Three agencies are thus involved.
Secondly, the local authority—under the Environmental Protection Act 1990—has a responsibility for off-site contamination from petrol station sites. Its responsibility is first to investigate complaints put to the local authority; it must then decide whether to take action on the basis of the following test: is what is happening prejudicial to public health, or is it a nuisance? If the leakage fails to meet those criteria, the local authority is not obliged to act.
The National Rivers Authority also has some power. It is obliged to act under the Water Resources Act 1991, but only when controlled waters are affected. The Health and Safety Executive is involved in the storage of petrol at petrol stations, but has no remit when pollution extends beyond them. Then there are the water companies, which can take action if their water supply is threatened. Having acted, they then bill those who have caused the problem; but if—as in the case cited by my hon. Friend the Member for Lancashire, West—the petrol company has gone out of business and lost its third party liability insurance, there will be no one for the water authority to take action against.
In the majority of cases, effective action takes place. There are 20,800 petrol stations registered in the United Kingdom. When there is co-operation between the petrol companies and the authorities, there will be few problems,

but when companies have gone out of business, there will be a serious problem, which my hon. Friend has highlighted.
The Warrington example has already been mentioned. As a result of a long-term leak from a petrol station, 17,000 gallons of pollution ended up in a local environment. All credit must go to Shell UK. Investigating the site, it discovered the level of pollution and brought in the local authority. It pumped off 17,000 gallons of petrol. The local authority then found petrol in the drain next to the station, and got the fire brigade to flush out the drain. That process pushed petrol into the water course. The National Rivers Authority was notified, but took no action; the local authority had to go back to its drainage section to trace the problems that had led to the original leak. The land is now being decontaminated. The whole thing worked quite well.
We see a different side of the story, however, in Braintree, in Essex. Over a long period, between 20,000 and 25,000 gallons of petrol ended up in the subsoil around a petrol station there as a result of a leak. The county and district councils were faced with the cost of clearing up, because the petrol station had gone out of business and the third party liability insurance had disappeared. Over four and a half years, the two local authorities spent a great deal of money trying to solve the problem. That is okay, but what happens when a small district authority cannot afford what could be £250,000? It is a real problem.
I shall conclude now because I have used my two examples. We want stringent guidelines for petrol station storage; we want more frequent and effective inspection and we want a unitary authority that will deal with the problem from top to bottom—it should not be left to a multi-agency. We need help for local authorities so that, when they recognise their responsibilities, they have the resources available to tackle the pollution problem.
If local authorities are given the power to inspect off-site pollution from petrol stations—the Minister may agree to this—the onus will not fall on small petrol stations and force them out of business simply to avoid their responsibilities. I commend the recommendations in the report to the Minister, which I shall certainly let him have. I thank my hon. Friend for the opportunity to participate in this debate.

The Minister for the Environment and Countryside (Mr. David Maclean): I congratulate the hon. Member for Lancashire, West (Mr. Pickthall) and thank him for bringing this matter to the attention of the House. It is in one way a local matter, but it also raises issues of general importance to which the House should rightly turn from tiime to tme.
The cases to which the hon. Gentleman drew attention illustrate the problems faced by local authorities and other public bodies in dealing with contamination. I am conscious of those problems and their complexity. The issues I will address include the powers and duties of public authorities to control or remedy contamination, preventive measures, methods for treating land once pollution has taken place and assessing the risks that attach to particular types of operation with polluting potential. The first point is that more than one public authority can get


involved in a case of this sort to prevent it from happening in the first place, to put the burden of remedial action where it belongs—on the polluter—or to take action when
As the hon. Members for Lancashire, West and for Warrington, South (Mr. Hall) may know, the Government have decided to review the powers and duties of public authorities which bear on contaminated land, including their powers to recover costs. That review has a considerable bearing on the issues raised tonight by the hon. Member for Lancashire, West, and I shall refer to it several times.
First, we wish to see cases of contamination such as the ones described by the hon. Gentleman tackled on a sensible basis. That is, action should be taken where the hazards to health or the environment are real and the means for tackling them are appropriate to both the problem and the continuing or intended use of the site. "Appropriate" also includes the matter of costs. We do not want to see environmental improvement or restoration carried out whatever the cost—the benefits must exceed the costs.
The hon. Gentleman asked whether small companies can survive proper regulation. That is another way of matching improvements to resources. I can assure him that we will not impose unnecessary or costly regulations on any company, large or small. He is right to draw attention to the fact that, while Shell and other large companies can take great measures to improve the potential for no leakage from their tanks—especially as they operate bigger sites—in rural areas and many smaller stations we could make the petrol tanks water tight. As the hon. Member for Warrington, South said, we could have stringent regulations to ensure that there would never be the slightest leak, but that would result in no smaller petrol stations at all—the cost would be astronomical.
Secondly, we wish to see the polluter pay. A company, large or small, should bear the cost of putting right any damage that it has done. But, in these cases, the "polluter" has gone away. Under such circumstances, there is no ready answer to the problem of who should pay. It can be unfair if the cost falls to others—notably, as the hon. Member for Lancashire, West pointed out, people like his constituents, who are on the receiving end of the damage. That is why our review includes the issue of liabilities for past pollution. I am afraid that I cannot promise that the outcome will please the hon. Gentleman, but the issue of fairness is one that we are addressing. In the meantime, his constituents have the usual rights of landowners to seek legal redress against others.
Thirdly, our review is focusing on the role of the pollution control authorities. It is intended to remove any doubts and inconsistencies in the way in which their powers operate. I cannot promise the hon. Gentleman that we will reduce the number of the appropriate players in this.
After all, the situation that has been described has many dimensions—health and safety at work, the threat to public health and homes, the threat to groundwater and threats of air pollution. The Health and Safety Executive, the National Rivers Authority and the local authority all have legitimate roles at present.
I should be worried about trying to create the all-singing all-dancing agency that the hon. Gentleman suggested, because it might not have the appropriate expertise to deal with all aspects. What we must do is ensure that, where two, three or four agencies are involved,

they clearly understand their responsibilities and there are no gaps or unnecessary bureaucratic overlaps between them. Therefore, we want to ensure that the right structure is in place.
The hon. Gentleman also spoke about the scope for clarifying the terms of insurance cover for petrol filling stations. Compulsory insurance to cover the costs of remedial work is among the issues raised in a Green Paper from the Commission of the European Communities about paying for environmental damage. We are, of course, considering our response to the Green Paper. Once again, I can assure the hon. Gentleman that we are therefore addressing the problem he has raised.
But I should point out that insurance must be paid for. It is a form of contract between the insurers and the insured. I understand that the Association of British Insurers looked at the question of the terms of cover for environmental pollution. I also know that individual brokers are developing policies to meet needs for cover in this area. I am not sure that we should interfere in that process. Nor is it likely that there is, for the moment at least, the ambiguity to which the hon. Gentleman referred.
I know that it is no comfort to the hon. Gentleman and to his constituents to know that the future should bring a more widely accepted solution to problems of past pollution. The problems of the hon. Gentleman's constituents are here and now. They are rightly exercised about why the problem developed and what will now be done to sort it out.
In the first instance, this is a matter for the West Lancashire district council. It has long-standing powers to tackle what are called "statutory nuisances". I understand that the council has done that to the extent of serving notices on the filling station owners who have now gone out of business.
As I said, we understand that West Lancashire district council has served abatement notices. That is, it has decided that these are problems within the scope of the legal powers conferred upon it by the Environmental Protection Act 1990. But it has found that the notices have not had the desired effect of getting the pollution cleared up by the persons responsible for it.
At this point, it is again for the council to decide whether the problem is in need of urgent action. It has the powers to take action itself to remedy the problems it described in the notices it served. It is for the council to explain why it has chosen not to act—if that is, indeed, its decision.
There are controls over petrol station operations. Prevention is obviously better than cure. All storage of petroleum has been controlled by licensing for many years. The Health and Safety Executive has issued guidance on appropriate conditions for licensing, including the testing of tanks. However, it has always been the policy that, in addition to physical testing of tanks, operators should have systems of continuous inventory control to show when petrol was being lost. I think that the short word for that is a dipstick. Most authorities make continuous inventory control a condition of licensing.
The hon. Gentleman has asked whether those controls can be tightened. I am aware that the Health and Safety Executive wrote in July 1990 to petroleum licensing authorities with interim guidance on tank testing and supply line testing. Tanks and lines are out of sight and, like all systems, deteriorate with age. That makes testing necessary but difficult. In particular, methods using water


tests proved costly and raised the problems of disposing of the contaminated water once the tank had been filled with it.
The interim guidance will be included in draft guidance and will be the subject of extensive public consultation. I hope that the hon. Gentleman will respond to that public consultation, bearing in mind the points made about the costs to smaller operators if we go for a Rolls-Royce approach with knobs and bells on. That process should give rise to a system which will balance the costs of better testing and regulation against the benefits of greater confidence and control over pollution.
Therefore, there is a framework for action and a framework for prevention. But it is not for us to interfere with the way in which the council acts in such cases. The Government's job is to channel resources and advice. The hon. Gentleman asked about the resources available to small councils. We are doing a great deal to help the handling of such cases.
First, we have made resources available in the form of supplementary credit approvals to local authorities, whether large or small, to tackle contamination where there is a threat to human health. A local authority can apply to my Department for SCAs to fund the investigation of a case or for clean-up work where the private sector polluter cannot pay. It is open to West Lancashire council to make such an application, which will be considered fairly, on its merits, along with the others.
The council may be concerned about precisely how to tackle a particular problem. To that end, we prepare advice. There are several methods for the remediation of land contaminated by petrol and related substances. Such methods are of little use unless potential users like the council know about them. My Department is carrying out

research to provide guidance on dealing with contamination of soil by a range of contaminants, including hydrocarbons such as petrol and diesel. We have already published some guidance.
In addition, the Institute of Petroleum has recently issued a useful "Code of Practice for the Investigation and Mitigation of Possible Petroleum-Based Land Contamination". My Department contributed comments during drafting, and the National Rivers Authority was represented on the editorial committee. Those are part of a broader programme of research into general contamination problems being carried out by the Department. Some other relevant research carried out by my Department includes a project to produce a framework for assessing the impact of contaminated land on groundwater and surface water, preparation of a screening protocol for contaminated land and participation in a major programme of research to produce guidance on remedial treatments sponsored by the Construction Industry Research and Information Association.
I have covered a lot of ground—I hope that the petrol has not—and I hope that I have reassured the hon. Gentleman. We are aware of the pollution control problems which pose challenges at all levels—organisational, technical and scientific. We are trying to ensure that we get all of them in balance. We would not claim to have got all the answers, which is why we are conducting the wide-ranging review. But, for to-night, I hope that I have shown the hon. Members for Lancashire, West and for Warrington, South that West Lancashire district council has the means, if it wishes, to take care of the interests of the residents of Scarisbrick. The same would be true of incidents in Warrington. I hope that the council will contribute to the review that we are conducting.

Question put and agreed to.

The motion having been made after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing order.

Adjourned at thirteen minutes to Eleven o'clock.